<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 16, 1998
SANTA FE GAMING CORPORATION
---------------------------
(Exact Name of Registrant as Specified in Charter)
NEVADA 1-9481 88-0304348
------ ------ -----------
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
4949 NORTH RANCHO DRIVE 89130
LAS VEGAS, NEVADA
----------------------- ------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (702) 658-4300
--------------
NONE
----
(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 4 Pages
Exhibit Index at Page 3
<PAGE>
ITEM 5. OTHER EVENTS.
This report is qualified in its entirety by reference to the documents
described herein and attached or incorporated herein as exhibits hereto, which
are incorporated herein by this reference.
Pioneer Finance Corp. ("Pioneer"), a wholly-owned subsidiary of Santa Fe
Gaming Corporation, announced on November 16, 1998 that it has amended its
outstanding exchange offer and consent solicitation launched on October 23,
1998 with respect to its 13-1/2% First Mortgage Bonds due December 1, 1998 as
described in the Supplement, dated November 14, 1998, to the Offering
Circular and Consent Solicitation Statement incorporated herein by reference.
In addition, Pioneer has extended the expiration date of the exchange offer
and the expiration date of the consent solicitation to 5:00 P.M., New York
City time, on Tuesday, November 24, 1998.
A copy of the press release dated November 16, 1998 issued by Pioneer,
relating to the amendment of the exchange offer and consent solicitation and
the extended expiration date, is filed as an exhibit to this Current Report on
Form 8-K.
2
<PAGE>
ITEM 7. EXHIBITS.
The following exhibits are filed with this current report on Form 8-K:
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
99.1 Press Release dated November 16, 1998.
99.2 Supplement, dated November 14, 1998, to Offering Circular and
Consent Solicitation Statement.
</TABLE>
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SANTA FE GAMING CORPORATION
Date: November 16, 1998 By: /s/ Thomas K. Land
-----------------------------
Thomas K. Land
Senior Vice President and
Chief Financial Officer
4
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[SANTA FE LOGO]
Pioneer Finance Corp. Announces Amendment of Exchange Offer and Consent
Solicitation and Agreement With Unofficial Group of Bondholders
LAS VEGAS, Nov. 16 /PRNewswire/ -- Pioneer Finance Corp. ("Pioneer"), a
subsidiary of Santa Fe Gaming Corporation, a diversified gaming company
headquartered in Las Vegas, announced today that it is amending its
outstanding exchange offer and consent solicitation launched on October 23,
1998 with respect to its 13-1/2% First Mortgage Bonds due December 1, 1998
(the "Pioneer Notes"), and that an unofficial group of holders (including the
single largest holder) have agreed to tender their Pioneer Notes and furnish
consents.
In the amendment to the exchange offer, Pioneer is amending the terms of
the securities offered in exchange for the Pioneer Notes by, among other
things, providing for an event of default in December 1999 if certain
repurchases of the new notes have not been consummated by that date. The
consent solicitation is amended by, among other things, lowering the
principal amount of Pioneer Notes with respect to which consents must be
received from $47 million to $42 million, by providing for certain defaults
that would permit termination of the consents by amending the Pioneer Notes
in certain respects. A Supplement to the October 23, 1998 Offering Circular
and Consent Solicitation Statement describing the amendments is being mailed
to holders of the Pioneer Notes; copies of the Supplement may be obtained by
contacting Thomas K. Land, Chief Financial Officer of Santa Fe Gaming, at
702-658-4340.
In connection with the amendments, Pioneer has extended the expiration
date of both the exchange offer and of the consent solicitation to 5:00 P.M.,
New York City time, on Tuesday, November 24, 1998. The exchange offer and
consent solicitation were previously scheduled to expire at 12:00 midnight on
Friday, November 20, 1998.
Holders of Pioneer Notes may use either the amended letter of
transmittal and consent form (lavender) mailed with the Supplement or the
original letter of transmittal and consent form (blue) mailed with the
October 23, 1998 Offering Circular and Consent Solicitation or Statement to
tender in the exchange or furnish consents. Holders who use the original
letter of transmittal and consent form will be deemed to have tendered or
consented on the amended terms of the exchange offer and consent solicitation.
Santa Fe Gaming Corporation owns and operates the Santa Fe Hotel and
Casino in northwest Las Vegas and the Pioneer Hotel & Gambling Hall in
Laughlin, Nevada. In addition, the Company holds several real estate parcels
for future development within or in the area surrounding Las Vegas, Nevada.
SOURCE Santa Fe Gaming Corporation
-0- 11/16/98
/CONTACT: Thomas K. Land, Chief Financial Officer, Santa Fe Gaming
Corporation. 702-658-4340/
<PAGE>
SUPPLEMENT DATED NOVEMBER 14, 1998
TO
OFFERING CIRCULAR AND CONSENT SOLICITATION STATEMENT
DATED OCTOBER 23, 1998
PIONEER FINANCE CORP.
AMENDED
OFFER TO EXCHANGE
ALL OUTSTANDING
13 1/2% FIRST MORTGAGE BONDS DUE DECEMBER 1, 1998
($60,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR 13 1/2% FIRST MORTGAGE NOTES DUE 2006
AND
CONSENT SOLICITATION STATEMENT
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON TUESDAY, NOVEMBER 24, 1998 (AS SUCH DATE MAY BE EXTENDED, THE "EXCHANGE
EXPIRATION DATE"). THE CONSENT SOLICITATION AND REVOCATION RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON TUESDAY, NOVEMBER 24, 1998 (AS SUCH DATE
MAY BE EXTENDED, THE "SOLICITATION EXPIRATION DATE.")
- --------------------------------------------------------------------------------
Pioneer Finance Corp. ("PFC" or the "Company") is supplementing (the
"Supplement") the Offering Circular and Consent Solicitation Statement dated
October 23, 1998 with respect to (i) its offer to exchange its 13 1/2% First
Mortgage Notes due 2006 and cash (the "New Notes") for all its outstanding
13 1/2% First Mortgage Bonds due December 1, 1998 (the "Old Notes") properly
tendered for exchange and not withdrawn by this Supplement and (ii) its
solicitation of certain consents of holders of Old Notes relating to the
forbearance against the exercise of rights and remedies upon a failure to pay
principal and interest on the Old Notes and the Purchase Money Note when due on
December 1, 1998 and any other defaults arising as a direct result of such
failures, the agreement to vote to accept a plan of reorganization (the "Plan")
that provides for treatment of the Old Notes in a manner substantially the same
as proposed in the exchange in the event PFC files a bankruptcy case under
Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), and
certain amendments to the Old Note Indenture.
This Supplement should be read together with the Offering Circular and
Consent Solicitation Statement dated October 23, 1998 previously mailed to
holders of the Old Notes. Capitalized terms used in this Supplement without
definition have the meanings assigned to them in the Offering Circular and
Consent Solicitation Statement dated October 23, 1998. The offer to exchange,
as amended and supplemented by this Supplement, is referred to as the "Exchange
Offer." The solicitation for consents, as amended and supplemented by this
Supplement, is referred to as the "Solicitation" and the consents sought by the
Solicitation, as amended and supplemented herein, are referred to as the
"Consents." The Offering Circular and Consent Solicitation Statement, as
supplemented by this Supplement, is referred to as the "Amended Joint Offering
Circular/Consent Solicitation Statement."
THE COMPANY HAS BEEN ADVISED BY AN UNOFFICIAL GROUP OF HOLDERS OF OLD
NOTES, WHICH INCLUDES THE SINGLE LARGEST HOLDER OF OLD NOTES AND BENEFICIALLY
OWNS AN AGGREGATE OF 45.48% OF THE OUTSTANDING OLD NOTES, THAT SUCH HOLDERS HAVE
AGREED TO TENDER OR CAUSE TO BE TENDERED THE OLD NOTES BENEFICIALLY OWNED BY
THEM IN THE EXCHANGE OFFER, AND TO DELIVER OR CAUSE TO BE DELIVERED CONSENTS
WITH RESPECT TO THE OLD NOTES BENEFICIALLY OWNED BY THEM IN THE SOLICITATION.
If the Exchange Offer is not consummated but the Requisite Consents
are obtained and accepted, PFC will file for relief under Chapter 11 of the
Bankruptcy Code and seek confirmation of the Plan. If the Exchange Offer is not
consummated and the Requisite Consents are not received, the Company may file
for relief under Chapter 11 of the Bankruptcy Code or may continue to negotiate
with the holders of the Old Notes for a
<PAGE>
restructuring of the Old Notes. If the Company were to seek confirmation of
the Plan, no assurance can be given that the Plan would meet the requirements
of confirmation, even if the Requisite Consents are received and the Old
Notes subject to the Consents are voted to accept the Plan. Giving effect to
the issuance of New Notes as of the beginning of the period and assuming that
PFC elects to pay 50% of the interest payment obligations through December 1,
2000 through the issuance of PIK Notes, the ratio of EBITDA to cash interest
expense would have been 1.40-to-one, and EBITDA less corporate charges
(giving effect to fees payable under the Management Agreement) to cash
interest expense would have been 1.11-to-one, in each case for the twelve
months ended June 30, 1998. Upon commencement of the requirement that all
interest be paid in cash in 2001, the ratio of EBITDA to cash interest
expense on the New Notes is expected to be less than one-to-one (assuming no
offers to repurchase New Notes have been made). Therefore, it is expected
that PFC would not be able to make the cash interest payment in June 2001,
which would be an event of default.
At any time after the December 1, 1998 maturity date of the Old Notes,
if the Company has not filed for bankruptcy relief and the Exchange Offer has
not been consummated, it is possible that three or more holders of Old Notes or
other creditors of PFC would file an involuntary petition under the Bankruptcy
Code with respect to PFC. If PFC were to become a debtor in a case under the
Bankruptcy Code (whether a case were commenced voluntarily or involuntarily), it
is likely that Pioneer Hotel Inc. ("PHI") and Santa Fe Gaming Corporation
("SFGC") would file for relief under Chapter 11 of the Bankruptcy Code. The
commencement of a voluntary case under the Bankruptcy Code by SFGC or certain
circumstances related to an involuntary case under the Bankruptcy Code with
respect to SFGC will cause the automatic acceleration of outstanding
indebtedness of subsidiaries of SFGC, Santa Fe Hotel Inc. ("SFHI") and Sahara
Las Vegas Corp. ("SLVC"), all of which indebtedness is guaranteed by SFGC. If
acceleration were to occur, SFGC would expect to negotiate with the creditors of
SFHI and SLVC regarding a rescission of the acceleration. However, if the
creditors holding the indebtedness were not to rescind the acceleration, it is
likely that SFHI and SLVC would file for relief under Chapter 11 of the
Bankruptcy Code.
Delivery of either the Amended Letter of Transmittal and Consent Form
(lavender) accompanying this Supplement or the original Letter of Transmittal
and Consent Form (blue) which accompanied the Offering Circular and Consent
Solicitation Statement dated October 23, 1998 will satisfy the letter of
transmittal and consent form delivery requirements for validly tendering Old
Notes in the Exchange or furnishing valid Consents in the Solicitation. ANY
HOLDER THAT SUBMITS THE ORIGINAL LETTER OF TRANSMITTAL AND CONSENT FORM (BLUE)
AND DOES NOT WITHDRAW SUCH HOLDER'S TENDER OR REVOKE SUCH HOLDER'S CONSENT PRIOR
TO THE EXCHANGE EXPIRATION DATE OR THE SOLICITATION EXPIRATION DATE, AS
APPLICABLE, WILL BE DEEMED TO HAVE TENDERED IN THE EXCHANGE OFFER AND/OR
FURNISHED THE CONSENTS, IN EACH CASE AS AMENDED BY THIS SUPPLEMENT.
THE EXCHANGE OFFER IS NOT BEING MADE TO AND CONSENTS ARE NOT BEING
SOLICITED FROM, NOR WILL THE COMPANY ACCEPT SURRENDERS FOR EXCHANGE OR CONSENTS
FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER, THE
SOLICITATION OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
_____________________________
SEE "ADDITIONAL RISK FACTORS RELATING TO THE SOLICITATION AND THE EXCHANGE"
BEGINNING ON PAGE 3 HEREIN FOR A DISCUSSION OF CERTAIN ADDITIONAL RISKS THAT
SHOULD BE CONSIDERED BY HOLDERS IN EVALUATING THE EXCHANGE OFFER AND
SOLICITATION.
THE OFFER OF THE SECURITIES OFFERED HEREBY HAVE NOT APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR. ANY
REPRESENTATION TO THE CONTRARY IS CRIMINAL OFFENSE.
The date of this Supplement to Offering Circular and Consent Solicitation
Statement is November 14, 1998
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SUMMARY DESCRIPTION OF AMENDED TERMS OF NEW NOTES. . . . . . . . . . . . . . . . . .1
SUMMARY DESCRIPTION OF AMENDED TERMS OF SOLICITATION . . . . . . . . . . . . . . . .3
ADDITIONAL RISK FACTORS RELATING TO THE SOLICITATION AND EXCHANGE. . . . . . . . . .5
MODIFICATIONS TO THE EXCHANGE OFFER AND TERMS OF
THE NEW NOTES TO BE ISSUED IN THE EXCHANGE OFFER . . . . . . . . . . . . . . . . . .7
MODIFICATIONS TO THE SOLICITATION. . . . . . . . . . . . . . . . . . . . . . . . . 11
MODIFICATIONS TO TERMS OF MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . . . 15
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
iii
<PAGE>
SUMMARY
Set forth below is a summary of the amended and supplemented terms of
the Exchange Offer, including the terms of the New Notes, and the
Solicitation.
SUMMARY DESCRIPTION OF AMENDED TERMS OF NEW NOTES
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<S> <C>
Excess Cash Redemption............ The Company will be required to redeem New
Notes on a semi-annual basis with 75% of
Excess Cash (as defined), to the extent
that 75% of Excess Cash for such
semi-annual period and for all previous
semi-annual periods that was not
previously subject to the redemption
requirement equals or exceeds $500,000.
Additional Event of Default....... The following will be an "Event of
Default":
The failure by December 31, 1999 of
either:
(a)(i) PFC to have completed an offer to
repurchase $7.5 million principal amount
of New Notes or to purchase in the open
market or otherwise and retire New Notes
with a principal amount purchasable with
$7.5 million and (ii) SLVC to grant Liens
for the benefit of the holders of the New
Notes in substantially all of its assets,
which assets shall include, at a minimum,
the Las Vegas Blvd. Property and the SFHI
Notes) as defined under "Amendments to
Certain Definitions"), subject to the
prior Liens securing not more than an
aggregate of $35 million of Debt (which
Debt may provide that interest is payable
in kind for up to three years) and related
costs and charges (the "SLVC Asset
Liens"); or
(b)(i) SLVC or its affiliates to have
Disposed of the SLVC Properties to
unaffiliated third parties for Approved
Consideration (as defined), (ii) SLVC to
distribute, directly or indirectly, to
SFGC, the Net Proceeds, if any, from such
Dispositions to the extent permitted by
applicable law and any agreements to which
SLVC or its stockholders may then be a
party (the "Disposition Net Proceeds");
(iii) SLVC to distribute, directly or
indirectly, to SFGC any SFHI Notes to the
extent permitted by applicable law and any
agreements to which SLVC or its
stockholders may then be a party;
(iv) SFGC to contribute to PFC the
Distribution Contributions; (v) PFC to
make an offer to repurchase, or repurchase
in the open market or otherwise and retire
New Notes with the Disposition Net
Proceeds contributed; (vi) PFC to pledge
the SFHI Notes to the trustee for the
benefit of the holders of the New Notes;
and (vii) PFC to file with the Securities
and Exchange Commission a registration
statement on Form S-4 covering the
exchange of New Notes with a principal
amount equal to the principal amount of
SFHI Notes
</TABLE>
1
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<TABLE>
<S> <C>
contributed to PFC in exchange for a
like principal amount of the SFHI
Notes. PFC will be obligated to use its
best efforts to have the registration
statement declared effective and commence
the exchange offer as soon as possible,
but in any event no later than 120 days
after filing, and to consummate the
exchange 20 business days after
commencement (or such larger period as may
be required by applicable law).
"Approved Consideration" means
consideration at least 50% of which is
cash. Any non-cash consideration must be
evidenced by a promissory note or other
Debt with a term to maturity no longer
than three years from the date of the
Disposition, which promissory note or
other Debt must be secured by the SLVC
Property Disposed of and pledged to the
trustee for the benefit of the holders of
the New Notes.
Additional Optional Offer to
Repurchase........................ PFC may satisfy the obligation set forth
in clause (a)(i) under "Additional Event
of Default" above by completing, on or
before December 31, 1999, an offer to
repurchase up to $7.5 million principal
amount of New Notes.
Additional Security for New Notes. The New Notes will be secured by a grant
of security interests in substantially all
of the assets of Hacienda Hotel Inc.
("Hacienda"), Sahara Nevada Corp. ("Sahara
Nevada") and Santa Fe Coffee Company
("Santa Fe Coffee"), other than Excluded
Assets (as defined under "Modifications to
the Exchange Offer and Terms of the New
Notes -- Amendment to Certain
Definitions"). See "Additional Risk
Factors Relating to the Solicitation and
the Exchange Offer." Additionally, if the
SFHI Notes are not subject to restriction
on grants of Liens with respect thereto,
SLVC will pledge the SFHI Notes to the
trustee for the benefit of the holders of
the New Notes.
Security for the Guaranty......... SFGC's guaranty will be secured by a
pledge by SFGC of all the outstanding
common stock of SFHI, Sahara Resorts
("SR"), Hacienda, Sahara Nevada, and Santa
Fe Coffee, and a grant of security
interests in substantially all of SFGC's
other assets other than Excluded Assets,
which pledges and security interests will
not be subject to prior Liens. See
"Additional Risk Factors Relating to the
Solicitation and the Exchange Offer."
Guarantor Covenants............... SFGC will be subject to covenants
restricting its ability to pay dividends
or make other restricted payments
(including investments).
Change of Control................. A change in control will occur if (a) SFGC
fails to own, directly or indirectly, 100%
of the outstanding voting stock of PHI or
PFC, (b) the Lowden Family (as defined)
fails to own at least a majority of the
outstanding voting
</TABLE>
2
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<TABLE>
<S> <C>
stock of SFGC, or (c) any person (other
than the Lowden Family) becomes the
beneficial owners of more than 35% of
the outstanding voting stock of SFGC.
Upon a change of control, PFC will be
required to make an offer to repurchase
all outstanding New Notes at 100% of the
principal amount thereof, plus accrued
and unpaid interest to the date of
repurchase.
SUMMARY DESCRIPTION OF AMENDED TERMS OF SOLICITATION
Additional Security for Old Notes.. Upon receipt and acceptance of the
Requisite Consents, each of Hacienda,
Sahara Nevada and Santa Fe Coffee will
grant security interests in substantially
all of their assets, other than Excluded
Assets, to secure the Old Notes. See
"Additional Risk Factors Relating to the
Solicitation and the Exchange Offer."
Security for the Guaranty......... Upon receipt and acceptance of the
Requisite Consents, SFGC will pledge the
stock of its subsidiaries, SFHI, SR,
Hacienda, Sahara Nevada and Santa Fe
Coffee, and will grant a security
interest in substantially all of its other
assets, other than Excluded
Assets, to secure the guaranty, which
pledges and security interests will not
be subject to prior Liens.
Requisite Consents................ In order for the Consents to become
effective, the Exchange Offer must not be
consummated and the Company must receive
Consents of Holders with respect to at
least $42 million principal amount of Old
Notes (the "Requisite Consents").
Repurchase of Old Notes............ A consenting Holder's pro rata share of
Old Notes to be repurchased will be
determined by multiplying $6.5 million by
a fraction, the numerator of which is the
principal amount of Old Notes with respect
to which the Holder has furnished valid
Consents, and the denominator of which is
$60 million, rather than the aggregate
principal amount of Old Notes with respect
to which valid consents have been
received.
Events of Default; Termination of
Consents.......................... The Consents will be subject to
termination upon the direction of Holders
at least 75% of the aggregate principal
amount of Old Notes with respect to which
Consents are obtained upon the occurrence
of certain events of default. See
"Modifications to the Solicitation --
Events of Default." The Consents will
terminate at December 15, 2000 if not
previously terminated in accordance with
their terms.
Guarantor Covenants............... SFGC will be subject to covenants
restricting its ability to pay dividends
or make other restricted payments
(including investments).
Covenant to File for Bankruptcy
Protection........................ PFC will be required to file for relief
under Chapter 11 of
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3
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<TABLE>
<S> <C>
the Bankruptcy Code and to seek
confirmation of the Plan as soon as
practicable after effectiveness of the
Consents, provided that no such filing
shall be made earlier than 91 days after
the delivery by PFC of funds to the
Exchange Agent in an amount sufficient
to repurchase Old Notes in connection
with the Solicitation as described under
"Modifications to the Solicitation
Repurchase of Old Notes," unless an
involuntary case under the Bankruptcy
Code is initiated against PFC.
SFGC Covenant Not to File for
Bankruptcy Protection............. SFGC will agree that it will not file for
relief under the Bankruptcy Code, if at
all, earlier than 91 days after the grant
of the security interests contemplated by
"Modifications to the Solicitation --
Security for Guaranty," unless an
involuntary proceeding under the
Bankruptcy Code is initiated against SFGC.
Certain Amendments to the Old
Notes Indenture................... Pursuant to the Consents, certain
provisions of the Old Notes Indenture will
be amended. See "Modification to the
Solicitation -- Amendments to the Old
Notes Indenture."
Certain Waivers.................... PFC will agree to waive certain rights in
connection with a case under Chapter 11 of
the Bankruptcy Code.
</TABLE>
4
<PAGE>
ADDITIONAL RISK FACTORS RELATING
TO THE SOLICITATION AND EXCHANGE
In addition to the other information contained in this Amended Joint
Offering Circular/Consent Solicitation Statement, holders of Old Notes should
consider carefully the following risk factors affecting the business of the
Company.
FRAUDULENT CONVEYANCES AND PREFERENTIAL TRANSFERS
The ability of the holders of the Old Notes or the New Notes
(collectively, the "New Notes") or the trustee to enforce the guaranty or
realize on the additional collateral may be limited by certain fraudulent
conveyance laws. Various fraudulent conveyance and revocatory laws have been
enacted for the protection of creditors and may be utilized by a court of
competent jurisdiction to avoid any security interest in the collateral granted
to the trustee by the Company, SFGC or any of Atlantis, Sahara Illinois,
Hacienda, Sahara Nevada and Santa Fe Coffee (collectively, the "SFGC
Subsidiaries"), or to subordinate the obligations of the Company under the Notes
or the guaranty. The requirements for establishing a fraudulent conveyance or
revocatory transfer vary depending on the law of the jurisdiction which is being
applied. Generally, if under federal and certain state statutes in a
bankruptcy, reorganization, rehabilitation or similar proceeding in respect of
the Company, SFGC or the SFGC Subsidiaries, or in a lawsuit by or on behalf of
creditors against the Company, SFGC or the SFGC Subsidiaries, a court were to
find that (i)the Company, SFGC or the SFGC Subsidiaries, as the case may be,
incurred indebtedness in connection with the Notes (including the guaranty) or
granted security interests in the collateral with the intent of hindering,
delaying or defrauding current or future creditors of the Company, SFGC or the
SFGC Subsidiaries, as the case may be, or (ii) the Company, SFGC or the SFGC
Subsidiaries, as the case may be, received less than reasonably equivalent value
or fair consideration for incurring the indebtedness in connection with the
Notes (including the guaranty) or for granting security interests in the
collateral and the Company, SFGC or the SFGC Subsidiaries, as the case may be,
(a) was insolvent at the time of the incurrence of the indebtedness in
connection with the Notes (including the guaranty) or the granting of security
interests in the collateral, (b) was rendered insolvent by reason of incurring
the indebtedness in connection with the Notes (including the guaranty) or the
granting of security interests in the collateral, (c) was engaged or about to
engage in a business or transaction for which its assets constituted
unreasonably small capital or (d) intended to incur, or believed that it would
incur, debts beyond its ability to pay such debts as they matured (as all of the
foregoing terms are defined in or interpreted under the applicable fraudulent
conveyance or revocatory statutes), such court could, subject to applicable
statutes of limitation, with respect to the Company, SFGC or the SFGC
Subsidiaries, as the case may be, avoid in whole or in part the obligations of
the Company, SFGC or the SFGC Subsidiaries in connection with the New Notes
(including the guaranty) or the security interests granted in the collateral
and/or subordinate claims with respect to the Notes (including the guaranty) to
all other debts of the Company, SFGC or the SFGC Subsidiaries, as the
applicable. There can be no assurance that there would be sufficient amounts to
pay the Notes and the guaranty together with all other debts of the Company,
SFGC or the SFGC Subsidiaries, as applicable, if such obligations or security
interests in the collateral were avoided. Similarly, if the obligations of the
Company, SFGC or the SFGC Subsidiaries or the security interests securing them
were subordinated, there can be no assurance that after payment of the other
debts of the Company, SFGC or the SFGC Subsidiaries, there would be sufficient
assets to pay such subordinated claims with respect to the Notes and the
guaranty.
The measures of insolvency for purposes of the foregoing will vary
depending upon the law of the jurisdiction which is being applied in any such
proceeding. Generally, however, an entity will be considered insolvent if the
sum of its respective debts was greater than the fair saleable value of all of
its property at a fair valuation or if the present fair saleable value of its
assets is less than the amount that will be required to pay its probable
liability on its existing debts, as they become absolute and matured.
If certain bankruptcy or insolvency proceedings were initiated by or
against the Company, SFGC or the SFGC Subsidiaries within 90 days (or, possibly,
one year) after any payment by the Company, SFGC or the SFGC Subsidiaries with
respect to the Notes or the Guaranty or after the grant of security interests in
additional collateral, or if the Company, SFGC or the SFGC Subsidiaries
anticipated becoming insolvent, all or a portion of
5
<PAGE>
such payment or the grant of security interests could be avoided as a
preferential transfer under federal bankruptcy or applicable state insolvency
law, and the recipient of such payment or lien could be required to return
such payment or release such lien. In addition, the timing of any future
grants of security interests may result in treatment of such grants as
preferential transfers under applicable bankruptcy or state insolvency law
and, if so treated, could be set aside by a court.
INSIGNIFICANT ASSETS OF SFGC SUBSIDIARIES
The SFGC Subsidiaries will grant security interests in substantially
all of their assets, other than Excluded Assets, to secure the Notes. None of
the SFGC Subsidiaries has ongoing operations, and each of the SFGC Subsidiaries
has insignificant assets. As a result, the grant of such security interests
will not enhance substantially the collateral securing the Notes.
CERTAIN BANKRUPTCY COVENANTS AND WAIVERS
The (i) covenants of PFC and SFGC not to file for relief under the
Bankruptcy Code until at least 91 days after the transfer of funds to the
Exchange Agent in an amount sufficient to repurchase Old Notes in connection
with the Solicitation, in the case of PFC, or the grant of security interests
contemplated by "Modifications to the Solicitation -- Security for Guaranty," in
the case of SFGC, and (ii) waivers of certain rights with respect to Section 362
of the Bankruptcy Code and notification of sale of assets, may not be
enforceable.
LAUGHLIN MARKET; COMPETITION
On November 3, 1998, California voters approved an initiative
(Proposition 5) that mandates that the Governor sign compacts authorizing gaming
operations on tribal lands by Native American tribes upon their request, and
permits gambling devices, including slot machines, banked card games and
lotteries at tribal casinos. The passage of Proposition 5 is likely to have a
material adverse effect on the financial condition and results of operations of
the Pioneer.
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MODIFICATIONS TO THE EXCHANGE OFFER
AND TERMS OF THE NEW NOTES
TO BE ISSUED IN THE EXCHANGE OFFER
Set forth below is a summary of the modifications to the terms of the
New Notes. The following does not purport to be a full description thereof and
is qualified in its entirety by reference to the Indenture referred to below,
the Mirror Note, the Deed of Trust, the Guaranty and the other exhibits to the
Indenture (including certain terms defined in such documents), copies of which
have are available upon request to PHI at 4949 North Rancho Drive, Las Vegas,
Nevada 89130, Attention: Chief Financial Officer. The terms of the New Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 as in effect on the date of the
Indenture.
AMENDMENTS TO CERTAIN DEFINITIONS
The definitions of "Cash Flow," "Consolidated Net Income," "Excess
Cash Flow" and "Net Income" are deleted.
"Change in Control" means any of the following events: (i) the Lowden
Family ceasing to own beneficially at least a majority of the outstanding Voting
Shares of or, if such entity does not have Voting Shares, other equity or
ownership interests in, SFGC or its successors; (ii) any Person or group (which
term, as used in this definition, has the meaning specified in
Section 13(d)(3) of the Exchange Act) other than the Lowden Family shall attain
beneficial ownership of 35% or more of the total number of outstanding Voting
Shares of, or, if such entity does not have Voting Shares, other equity or
ownership interests in, SFGC or its successor; or (iii) SFGC ceasing to have
beneficial ownership, directly or indirectly, of all of the outstanding Voting
Shares of, or if such entity does not have Voting Shares, other equity or
ownership interests in, PHI or PFC.
"Excess Cash" for any Excess Cash Period means cash or cash
equivalents held by PHI as of the end of such Excess Cash Period, less
(i) casino bankroll as of the end of such Excess Cash Period, provided such
amount shall not be in excess of $2.1 million, (ii) $500,000 (allocated to
maintenance capital expenditures), (iii) accrued and unpaid cash interest with
respect to Debt of PHI as of the end of such Excess Cash Period and (iv) actual
capital expenditures incurred and accrued but not paid with respect to
non-maintenance capital expenditures during such Excess Cash Period provided
such amount shall not exceed $1.0 million in any Excess Cash Period.
"Excess Cash Period" has the meaning set forth under "Redemption --
Excess Cash."
"Excluded Assets" means, in the case of SFGC, the approximately
20 acre parcel of real property located at Lone Mountain Road, Las Vegas,
Nevada, the capital stock of any Subsidiaries other than the SFGC Subsidiaries
and, in the case of the SFGC Subsidiaries, any receivables.
"Disposition Contributions" means cash equal to Disposition Net
Proceeds less any amount required to prepay principal and interest on the Sierra
Note.
"Disposition Net Proceeds" has the meaning set forth under "Additional
Event of Default."
"Henderson Property" means the approximately 39 acre parcel of real
property in Henderson, Nevada owned by SLVC.
"Las Vegas Blvd. Property" means the approximately 27 acre parcel of
real property on Las Vegas Boulevard South owned by SLVC.
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"SFGC Subsidiaries" means Hacienda Hotel Inc., a Nevada corporation,
Sahara Nevada Corp., a Nevada corporation and Santa Fe Coffee Company, a Nevada
corporation.
"SFHI Notes" means the 11% First Mortgage Notes due 2000 issued by
SFHI and owned by SLVC as of the date of the Indenture.
"SLVC Properties" means the Henderson Property and Las Vegas Blvd.
Property.
ADDITIONAL SECURITY FOR NEW NOTES
The New Notes will be secured by a grant by the SFGC Subsidiaries of
security interests in substantially all of their assets other than Excluded
Assets. See "Additional Risk Factors Relating to the Solicitation and The
Exchange Offer." Additionally, if the SFHI Notes are not subject to restriction
on granting of liens with respect thereto, SLVC will pledge the SFHI Notes to
the trustee for the benefit of the holders of the Old Notes.
SECURITY FOR GUARANTY
In addition to the pledge of the common stock of SFHI and SR, SFGC
will pledge the common stock of Hacienda, Sahara Nevada and Santa Fe Coffee to
secure the guaranty. SFGC will also grant to the Trustee for the benefit of the
Noteholders, security interests in substantially all of its assets, other than
the Excluded Assets, to secure the guaranty. The pledges and security interests
will not be subject to prior Liens.
RELEASE OF COLLATERAL SECURING THE GUARANTY
In connection with the release of the pledge of the SFHI common stock
securing the guaranty as described under "Guaranty; Substitution and Release of
Collateral" in the Offering Circular and Consent Solicitation Statement dated
October 23, 1998, PFC's obligations to repurchase New Notes may be satisfied by
PFC either making an offer to repurchase $7.5 million principal amount of New
Notes, or acquiring in the open market or otherwise and retiring New Notes, the
principal amount of which is purchasable with $7.5 million, after the date of
issuance of the New Notes.
In connection with the release of SLVC Asset Liens or the SFHI
Securities Liens upon a Disposition of any of the assets subject to the SLVC
Asset Liens or the securities subject to the SFHI Securities Liens described
under "Guaranty; Substitution and Release of Collateral" in the Offering
Circular and Consent Solicitation Statement dated October 23, 1998, PFC's
obligations to repurchase New Notes may be satisfied by PFC either making an
offer to repurchase New Notes, at 100% of the principal amount thereof plus
accrued and unpaid interest thereon, purchasable with the Disposition
Contributions received related to a Disposition of assets subject to the SLVC
Asset Liens or the SFHI Securities Liens, or acquiring in the open market or
otherwise and retiring New Notes with a principal amount, plus accrued and
unpaid interest thereon, purchasable with the Disposition Contributions.
REDEMPTION
EXCESS CASH REDEMPTION. In addition to the mandatory redemption
related to certain principal payments under the Sierra Note, PFC will be
required to redeem (an "Excess Cash Redemption") New Notes, at a Redemption
Price equal to 100% of the principal amount thereof, together with accrued
interest to the date fixed for redemption, with 75% of Excess Cash for the
preceding period of January 1 through June 30, or July 1 through December 31, as
applicable (each, an "Excess Cash Period"), within 60 days after each of June 30
or December 31, commencing with June 30, 1999. Notwithstanding the foregoing,
if 75% of Excess Cash for any Excess Cash Period is less than $500,000, the
Company will not be obligated to make an Excess Cash Redemption until 75% of
Excess Cash from such Excess Cash Period, together with 75% of Excess Cash from
the succeeding Excess Cash Periods, equals or exceeds $500,000. In the event an
Excess Cash Redemption is deferred, the amount will be deposited in a segregated
account pledged to the trustee for the benefit of the Noteholder.
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EXCHANGE FOR SFHI NOTES. If the events described under clause (b)
under "Additional Event of Default" occur, PFC will be required to use best
efforts to have the registration statement declared effective and commence the
exchange offer described therein within 120 days of the filing date and complete
the exchange offer within 20 business days of the effective date of the
registration statement (or such longer time period as required by applicable
law).
SELECTION. The Indenture provides that, in the event of less than all
the outstanding New Notes, the particular New Notes to be redeemed will be
selected by the Trustee pro rata, by lot or by such other manner as the Trustee
deems equitable; provided that in connection with an Excess Cash Redemption, the
Trustee will select New Notes to be redeemed by lot.
ADDITIONAL OPTIONAL OFFER TO REPURCHASE
OFFER TO REPURCHASE $7.5 MILLION PRINCIPAL AMOUNT OF NEW NOTES. PFC
may satisfy the obligation set forth in clause (a)(i) under "Additional Event of
Default" below by completing, on or before December 31, 1999, an offer to
repurchase up to $7.5 million principal amount of New Notes.
ADDITIONAL COVENANTS
REPORTS. In addition to the reports and other information PHI may
otherwise be required by the Indenture to provide to the Trustee, PHI will file
with the Trustee, for the Trustee to provide to the Holders of the New Notes,
unaudited financial statements of PHI within 50 days of the end of the first
three quarters of any fiscal year, and within 100 days of any fiscal year-end.
AMENDMENTS TO MANAGEMENT AGREEMENT. PHI and SFGC may not amend the
Management Agreement without the consent of Holders of at least a majority of
the outstanding principal amount of New Notes.
ADDITIONAL EVENT OF DEFAULT
The following additional event will be an "Event of Default":
- The failure by December 31, 1999 of either:
(a)(i) PFC to have completed an offer to repurchase $7.5 million
principal amount of New Notes or to purchase in the open market or
otherwise and retire at least $7.5 million principal amount of the New
Notes and (ii) SLVC to grant Liens for the benefit of the holders of the
New Notes in substantially all of its assets, which assets shall include,
at a minimum, the Wet N' Wild Parcel and the SFHI Notes as defined under
"Amendments to Certain Definitions," subject to the prior Liens securing
not more than an aggregate of $35 million of Debt (which Debt may provide
that interest is payable in kind for up to three years) and related costs
and charges (the "SLVC Asset Liens"); or
(b)(i) SLVC or its affiliates to have Disposed of both the SLVC
Properties to unaffiliated third parties for Approved Consideration (as
defined); (ii) SLVC to distribute, directly or indirectly, to SFGC, the Net
Proceeds, if any, from such Dispositions to the extent permitted by
applicable law and any agreements to which SLVC or its stockholders may
then be a party (the "Disposition Net Proceeds"); (iii) SLVC to distribute,
directly or indirectly, to SFGC any SFHI Notes to the extent permitted by
applicable law and any agreements to which SLVC or its stockholders may
then be a party; (iv) SFGC to contribute to PFC the Distribution
Contributions; (v) PFC to make an offer to repurchase, or repurchase in the
open market or otherwise and retire New Notes with the Disposition Net
Proceeds contributed; (vi) PFC to pledge the SFHI Notes to the trustee for
the benefit of the Holders of the New Notes, and (vii) PFC to file with the
Securities and Exchange Commission a registration statement on Form S-4
covering the exchange of New Notes with a principal equal to the principal
amount of SFHI Notes contributed to PFC in exchange for a like principal
amount of the SFHI Notes.
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"Approved Consideration" means consideration at least 50% of
which is cash. Any non-cash consideration must be evidenced by a
promissory note or other Debt with a term to maturity no longer than three
years from the date of the Disposition, which promissory note or other Debt
must be secured by the SLVC Property Disposed of and pledged to the trustee
for the benefit of the holders of the New Notes.
COVENANTS OF SFGC, AS GUARANTOR
SFGC, in it capacity as Guarantor, will be subject to the
following covenant:
- SFGC may not make any dividend or other distribution on any class
of its capital stock, except dividends payable solely in shares of that class of
capital stock;
- SFGC may not redeem, retire, make any sinking fund or similar
payment, purchase or making other acquisition for value of any shares of any
class of its capital stock;
- SFGC may not make any payment to retire or to obtain the
surrender of any outstanding warrants, options or other rights to acquire shares
of its capital stock; and
- SFGC may not make any payment or prepayment of principal of,
premium, if any or redemption, purchase, retirement, defeasance, sinking fund or
similar payment with respect to any subordinated indebtedness.
PROCEDURES FOR TENDERING OLD NOTES -- DELIVERY OF AMENDED LETTER OF TRANSMITTAL
AND CONSENT FORM (LAVENDER)
The tender of a holder's Old Notes as set forth below and the
acceptance thereof by the Company will constitute a binding agreement between
the tendering holder and the Company upon the terms and subject to the
conditions set forth in the Amended Joint Offering Circular/Consent Solicitation
Statement and in the accompanying Amended Letter of Transmittal and Consent Form
(lavender). Except as set forth below, a holder who wishes to tender Old Notes
for exchange pursuant to the Exchange Offer must transmit such Old Notes,
together with a properly completed and duly executed Amended Letter of
Transmittal and Consent Form, including all other documents required by such
Amended Letter of Transmittal and Consent Form to the Exchange/Solicitation
Agent at the address set forth on the back cover page of the Amended Joint
Offering Circular/Consent Solicitation Statement prior to 5:00 P.M., New York
City time, on the Exchange Expiration Date.
DELIVERY OF AN ORIGINAL LETTER OF TRANSMITTAL AND CONSENT FORM (BLUE)
THAT IS NOT WITHDRAWN PRIOR TO THE EXCHANGE EXPIRATION DATE WILL SATISFY THE
LETTER OF TRANSMITTAL AND CONSENT FORM DELIVERY REQUIREMENT FOR PROPER TENDERS;
PROVIDED THAT A HOLDER WHO DELIVERS AN ORIGINAL LETTER OF TRANSMITTAL AND
CONSENT FORM (BLUE) WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES SUBJECT TO
SUCH LETTER OF TRANSMITTAL AND CONSENT FORM PURSUANT TO THE EXCHANGE OFFER AS
AMENDED BY THIS SUPPLEMENT.
THE METHOD OF DELIVERY OF OLD NOTES, AMENDED LETTERS OF TRANSMITTAL
AND CONSENT FORM AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF
THE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED
MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY.
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MODIFICATIONS TO THE SOLICITATION
REVISED CONSENTS
The Company is soliciting the consents (the "Consents") of the Holders
to the following (the "Proposed Consents"), which will be effective only if the
Exchange Offer is not consummated and valid consents are properly furnished by
the Solicitation Expiration Date with respect to at least $42 million principal
amount of Old Notes:
- Until December 15, 2000 (the "Termination Date"), to forbear from
exercising any rights and remedies under the Old Notes, the Old Note
Indenture, the Guaranty and the Mortgage Documents (as defined in the
Old Note Indenture) with respect to any failure by the Company to pay
principal and interest on the Old Notes when due on December 1, 1998
(the "Maturity Defaults") and any other defaults under the Old Notes,
the Indenture, the Guaranty or the Mortgage Documents arising as a
direct consequence of the Maturity Defaults;
- Until the Termination Date, to forbear from exercising any rights
and remedies under the Purchase Money Note and related security
documents with respect to any failure by PHI to pay principal and
interest on the Purchase Money Note when due on December 1, 1998
(the "Purchase Money Note Maturity Defaults") and any other defaults
under the Purchase Money Note arising as a direct consequence of the
Purchase Money Note Maturity Defaults;
- To consent to and support a plan of reorganization under Chapter 11
of the Bankruptcy Code which provides for treatment of the Old Notes
in a bankruptcy case under Chapter 11 of the Bankruptcy Code that is
substantially similar to the treatment of the Old Notes offered in the
Exchange; provided that (1) the additional Event of Default described
under "Modifications to the Exchange Offer and Terms of the New Notes
to be Issued in the Exchange Offer" will occur if the events
contemplated by paragraphs (a) or (b) thereof have not occurred by the
later of December 31, 1999 or six months after the date a plan of
reorganization is confirmed in a Chapter 11 case and (2) the Excess
Cash Redemption obligation will commence on the first June 30 or
December 31 following the date on which a plan of reorganization is
confirmed (the "Plan"). Such support shall include, without
limitation, (i) voting to accept the Plan and making reasonable
efforts to obtain confirmation of the Plan, even if the Plan involves
a "cramdown" under Section 1129(b) of the Bankruptcy Code of classes
of claims, including the class that includes the Old Notes, or equity
interests, (ii) not agreeing to, consenting to, recommending or voting
for any plan that contains terms inconsistent with the Plan, and
(iii) not objecting to or otherwise commencing any proceeding to
oppose or alter the Plan or taking any action that is inconsistent
with, or that would delay solicitation, confirmation, effectiveness or
substantial consummation of the Plan; and
- To amend the provisions of the Old Notes Indenture as described
below under "Amendments to the Old Notes Indenture."
REQUISITE CONSENTS
In order for the Proposed Consents to become effective, the Exchange Offer
must not be consummated and the Company must receive Consents of Holders with
respect to at least $42 million principal amount of Old Notes (the "Requisite
Consents").
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PROCEDURES FOR FURNISHING CONSENTS -- DELIVERY OF AMENDED LETTER OF TRANSMITTAL
AND CONSENT FORM (LAVENDER)
The furnishing of a consent and delivery of a holder's Old Notes as
set forth below and the acceptance thereof by the Company will constitute a
binding agreement between the tendering holder and the Company upon the terms
and subject to the conditions set forth in the Amended Joint Offering
Circular/Consent Solicitation Statement and in the accompanying Amended Letter
of Transmittal and Consent Form (lavender) with respect to the Consents. Except
as set forth below, a holder who wishes to furnish a Consent with respect to Old
Notes pursuant to the Solicitation must deliver a properly completed and duly
executed Amended Letter of Transmittal and Consent Form, together with the Old
Notes subject to the Consents and all other documents required by such Amended
Letter of Transmittal and Consent Form, to the Exchange/Solicitation Agent at
the address set forth on the back cover page of the Amended Joint Offering
Circular/Consent Solicitation Statement prior to 5:00 P.M., New York City time,
on the Solicitation Expiration Date.
DELIVERY OF AN ORIGINAL LETTER OF TRANSMITTAL AND CONSENT FORM (BLUE)
WILL SATISFY THE LETTER OF TRANSMITTAL AND CONSENT FORM DELIVERY REQUIREMENTS
FOR FURNISHING VALID CONSENTS; PROVIDED THAT A HOLDER WHO DELIVERS AN ORIGINAL
LETTER OF TRANSMITTAL AND CONSENT FORM (BLUE) THAT IS NOT REVOKED PRIOR TO THE
SOLICITATION EXPIRATION DATE WILL BE DEEMED TO HAVE FURNISHED CONSENTS SUBJECT
TO SUCH LETTER OF TRANSMITTAL AND CONSENT FORM PURSUANT TO THE SOLICITATION AS
AMENDED BY THIS SUPPLEMENT.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND
CONSENT FORM, OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND
RISK OF THE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED.
INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT
OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY.
REPURCHASE OF OLD NOTES
Upon receipt of the Requisite Consents as of the Solicitation Expiration
Date and assuming the Exchange Offer is not consummated, the Company will
purchase for cash on a pro rata basis from the Holders of Old Notes with respect
to which valid Consents have been received an aggregate $6.5 million principal
amount of Old Notes, together with accrued and unpaid interest thereon
(approximately $400,000), assuming Consents are received with respect to 100% of
the outstanding Old Notes. Of the approximate $6.9 million cash to be paid, the
Company will allocate approximately $6.5 million to payment of an equivalent
principal amount of the Old Notes that are repurchased and approximately
$400,000 to the payment of accrued and unpaid interest thereon. By consenting
to the Solicitation, a Holder agrees to allocate the cash received for the
principal amount of the Old Notes and accrued and unpaid interest thereon in the
same manner in which the Company will make such allocation. To the extent
Consents are received with respect to less than 100% of the outstanding Old
Notes, the principal amount of Old Notes repurchased upon consummation of the
Solicitation will be reduced proportionately. For example, if Consents are
received with respect to 90% of the outstanding Old Notes (or $54 million), an
aggregate of $5.85 million principal amount of Old Notes will be purchased.
Each consenting Holder will have repurchased the Holder's pro rata share of
Old Notes, which will be determined by multiplying $6.5 million (or such lesser
amount reflecting the percentage of Old Notes with respect to which Consents are
received) by a fraction, the numerator of which is the principal amount of Old
Notes with respect to which the Holder has furnished valid Consents, and the
denominator of which is $60 million. The payments will be funded through
payments by PHI under the Purchase Money Note. In the event PFC were to file
for relief under Chapter 11 of the Bankruptcy Code within 90 days (or possibly
one year), or PHI were to file for relief under Chapter 11 of the Bankruptcy
Code within one year, of the payments, the payments may be avoidable as a
preference and could be subject to recovery by a trustee in bankruptcy, an
official creditors' committee, other representatives of creditors of PFC or PHI,
or PFC or PHI as debtors in possession. If the payments were
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successfully challenged as preferences, holders would be required to return
the funds received, together with interest thereon in a rate determined by
the court, or would be precluded from receiving any distribution on account
of such holders' Old Notes.
ADDITIONAL SECURITY FOR OLD NOTES
Upon receipt and acceptance of the Requisite Consents, Hacienda,
Sahara Nevada and Santa Fe Coffee will grant security interests in substantially
all of their assets, other than the Excluded Assets (as defined in
"Modifications to the Exchange Offer and the Terms of New Notes -- Amendments to
Certain Definitions"), to secure the Old Notes. See "Additional Risk Factors
Relating to the Solicitation and Exchange Offer." Additionally, if the SFHI
Notes are not subject to restriction on grants of Liens with respect thereto,
SLVC will pledge the SFHI Notes to the trustee for the benefit of the holders of
the Old Notes.
SECURITY FOR GUARANTY
Upon receipt and acceptance of the Requisite Consents, SFGC will
pledge the common stock of SFHI, SR, Hacienda, Sahara Nevada, and Santa Fe
Coffee, and will grant a security interest in substantially all of its other
assets, other than Excluded Assets (as defined in "Modifications to the Exchange
Offer and the Terms of New Notes -- Amendments to Certain Definitions"), to
secure the guaranty. The pledges and security interests will not be subject to
prior Liens.
COVENANT TO FILE FOR BANKRUPTCY PROTECTION
PFC will agree to file for relief under Chapter 11 of the Bankruptcy
Code (the "Bankruptcy Code") and to seek confirmation of the Plan as soon as
practicable after receipt and acceptance of the Requisite Consents, but not
earlier than 91 days after the delivery by PFC of funds to the Exchange Agent in
an amount sufficient to repurchase Old Notes in connection with the Solicitation
as described under "Modifications to the Solicitation -- Repurchase of Old
Notes," unless an involuntary bankruptcy case under the Bankruptcy Code is
initiated against PFC.
SFGC COVENANT NOT TO FILE FOR BANKRUPTCY PROTECTION
SFGC will agree that it will not file for relief under the Bankruptcy
Code, if at all, earlier than 91 days after the grant of the security interests
contemplated by "Modifications to the Solicitation -- Security for Guaranty,"
unless an involuntary proceeding under the Bankruptcy Code is initiated against
SFGC.
EVENTS OF DEFAULT; TERMINATION OF CONSENTS.
The following will be events of default under the Consents, which will
permit holders of Old Notes with an aggregate principal amount equal to at least
75% of the aggregate principal amount of Old Notes subject to Consents to
terminate the Consents:
- the failure by December 31, 1999 of either:
(a) (i) SLVC to be permitted by applicable law and any agreements
to which it is then a party and, upon bankruptcy court approval
contemplated by clause (ii), to be obligated to grant the SLVC Assets Liens
and (ii) PFC to use reasonable efforts to obtain bankruptcy court approval
to permit the acquisition and retirement of at least $7.5 million of Old
Notes, or
(b) (i) SLVC to dispose of the SLVC Properties for Approved
Consideration (provided any promissory note or other Debt must be pledged
to the trustee for the benefit of the holders of the Old Notes) and
(ii) PFC to use reasonable efforts to obtain bankruptcy court approval to
permit the repurchase of Old Notes with a principal amount equal to the
Disposition Net Proceeds contributed to PFC;
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- the failure by PFC, PHI or SFGC to comply with any obligations
arising under the Consents, which failure is not corrected within 30 days of
receipt of notice thereof;
- defaults under the Old Note Indenture and related documents
other than those arising as a result of the failure to pay principal and
interest on the Old Notes or the Purchase Money Note at maturity; and
- payment of principal under the Sierra Note, other than
pursuant to the mandatory prepayment provisions.
The Consents will terminate automatically at December 15, 2000 if
not previously terminated.
AMENDMENTS TO OLD NOTES INDENTURE
AMENDMENTS OF PIONEER GROUND LEASE. The Old Notes Indenture will
be amended to provide that PHI may, without the consent of the Holders of a
majority of the outstanding principal amount of Old Notes, amend or modify
the Pioneer Ground Lease in any manner which, in the aggregate, is not
adverse to the New Noteholders, provided that PHI obtains a determination of
an Independent Financial Advisor with respect thereto. The Old Notes
Indenture currently provides that no amendment or modification may be made to
the Pioneer Ground Lease without the consent of Holders of at least a
majority of the outstanding principal amount of Old Notes.
FORBEARANCE WITH RESPECT TO PURCHASE MONEY NOTE. The Purchase
Money Note will be amended to the extent necessary to permit the forbearance
agreement described under "Purchase Money Note Forbearance Agreement."
Approval of the amendments requires the consent of Holders of at
least a majority in outstanding principal amount of the Old Notes.
COVENANTS OF SFGC, AS GUARANTOR
SFGC, in it capacity as Guarantor, will be subject to the following
covenant:
- SFGC may not make any dividend or other distribution on any
class of its capital stock, except dividends payable solely in shares of that
class of capital stock;
- SFGC may not redeem, retire, make any sinking fund or similar
payment, purchase or make other acquisition for value of any shares of any
class of its capital stock;
- SFGC may not make any payment to retire or to obtain the
surrender of any outstanding warrants, options or other rights to acquire
shares of its capital stock; and
- SFGC may not make any payment or prepayment of principal of,
premium, if any or redemption, purchase, retirement, defeasance, sinking fund
or similar payment with respect to any subordinated indebtedness.
CERTAIN BANKRUPTCY WAIVERS
PFC agrees that, upon receipt and acceptance of the Requisite
Consents, in the event that it commences or prosecutes a voluntary case under
the Bankruptcy Code, except, in order to effectuate the Plan, or is the
subject of an involuntary case under the Bankruptcy Code, Holders shall be
entitled to an immediate hearing (on forty eight hours notice) with respect
to a motion for relief from the automatic stay imposed by Bankruptcy Code
section 362(a) (the "Relief Motion"), and that "cause" for such relief exists
within the meaning of Bankruptcy Code section 362(d)(1) and that the
conditions of Bankruptcy Code sections 362(d)(2) (A) and (B) are met. PFC
expressly waives any rights it may otherwise have to oppose the Relief
Motion, whether such motion is brought
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under Bankruptcy Code sections 362(d)(1) and/or 362(d)(2) to seek injunctive
relief under Bankruptcy Code section 105, and to assert Bankruptcy Rule 7065
against enforcement of, or in conflict with the provisions of the Consent.
PFC also agrees that upon receipt and acceptance of the Requisite
Consents and while the Consents are effective, it waives and renounces all
rights that it may have to notification of sale, whether public or private,
under the Uniform Commercial Code, the Old Notes and related documents, which
waiver and renouncement is hereby given in accordance with Uniform Commercial
Code Section 9504(3).
OFFICIAL CREDITORS' COMMITTEE
PFC will affirmatively support (i) a motion approved by the Holders
of at least 75% of the aggregate principal amount of Old Notes subject to the
Consents to appoint an official committee of holders of Old Notes, provided
it receives, at least three business days prior to the filing, written notice
of the intention to file such motion and a list of holders of Old Notes that
have agreed to serve on such committee, and (ii) the employment of the
official committee's choice of attorneys to represent it in the case, subject
to PFC's reasonable approval, upon the commencement of a voluntary case under
the Bankruptcy Code or if PFC is the subject of an involuntary case under the
Bankruptcy Code.
PURCHASE MONEY NOTE FORBEARANCE
PFC and PHI will enter into a forbearance agreement pursuant to
which PFC will agree to forbear against exercising any rights and remedies
under the Purchase Money Note while the Consents are effective.
MODIFICATIONS TO TERMS OF MANAGEMENT AGREEMENT
The Management Agreement will provide that, in consideration for
SFGC's agreement to provide Management Services and grant the License, PHI
will pay to SFGC:
(a) through December 31, 1999 (or if earlier, in the event the
Solicitation is consummated, the date of confirmation of the Plan), a fixed
fee of $83,334 per month (pro rated for partial months); and
(b) after December 31, 1999 (or, if earlier, in the event the
Solicitation is consummated, the date of confirmation of the Plan),
(i) a fixed fee of $63,334 per month (pro rated for partial
months); and
(ii) a variable fee (the "Variable Fee") of $60,000 for each full
quarter following such date, provided that earnings before
interest, taxes, depreciation, amortization and rents
("EBITDA") for such quarter is in excess of EBITDA for the
same quarter in the prior fiscal year.
During the occurrence and continuance of a Default or an Event of
Default, PHI will not pay, and SFGC will not be entitled to receive or
retain, any Variable Fee.
GENERAL
IBJ Schroder Bank & Trust Company (the "Exchange/Solicitation
Agent") has agreed to act as exchange and consent solicitation agent in
connection with the Exchange Offer and the Solicitation. D.F. King & Co.,
Inc. (the "Information Agent") has agreed to act as information agent in
connection with the Exchange Offer and the Solicitation. Holders of Old
Notes who require information about tendering Old Notes or about the
Solicitation or have general questions should contact the Company's Chief
Financial Officer, Thomas K. Land, at (702) 658-4340, the Information Agent
at (800) 628-8538 or at the Exchange/Solicitation Agent at (212) 858-2103.
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The Exchange Offer and Solicitation are being made by the Company
only to holders of Old Notes in reliance upon the exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), afforded by Section 3(a)(9) thereof. The Company will not
pay any commission or other remuneration to any broker, dealer, salesman or
other person for soliciting tenders of Old Notes. Officers, directors and
employees of the Company and SFGC may solicit tenders from holders of Old
Notes and will answer inquiries concerning the Exchange Offer, but they will
not receive additional compensation therefor.
The Company has no arrangements for and has no understanding with
any dealer, salesman or other person regarding the solicitation of tenders
hereunder and no person has been authorized to give any information or to
make any representation not contained in this Offering Circular in connection
with the Exchange Offer and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Company or any other person. Neither the delivery of this Offering Circular
nor any exchange made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company, SFGC
or SFGC's subsidiaries since the respective dates as of which information is
given herein.
AVAILABLE INFORMATION
The Company is not currently subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
SFGC is currently subject to the informational requirements of the Exchange
Act, and in accordance therewith files periodic reports and other information
with the Securities and Exchange Commission (the "Commission"). Such
periodic reports may be inspected without charge at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located
at 7 World Trade Center, 13th Floor, New York, New York 10048, and Suite
1400, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such materials may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and its public reference facilities in New York, New York and
Chicago, Illinois, at prescribed rates. The Commission maintains a website
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
address of the Commission's website is http:\\www.sec.gov. SFGC's common
stock is listed on the New York Stock Exchange and reports, proxy statements
and other information regarding SFGC and its subsidiaries can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The following documents have been filed with the Commission by SFGC:
1. SFGC's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997.
2. SFGC's Current Reports on Form 8-K dated December 4, 1997,
April 20, 1998 and October 27, 1998.
3. SFGC's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1997, March 31, 1998 and June 30, 1998.
Copies of all such documents, as well as all other reports filed by
SFGC pursuant to Section 13(a) and Section 15(d) of the Exchange Act from the
date hereof through the later of the Exchange Solicitation Date and the
Solicitation Expiration Date (not including the exhibits to such information,
unless such exhibits are specifically incorporated by reference in such
information) will be provided without charge to each person, including any
beneficial owners, to whom this Exchange Offer/Consent Solicitation Statement
is delivered, upon request. Copies of this Joint Offering Circular/Consent
Solicitation Statement, as amended or supplemented from time to time, and any
other documents (or parts of documents) that constitute part of this Joint
Offering Circular/Consent Solicitation Statement will also be provided
without charge to each such person, upon request. Requests should be
directed to the Company, 4949 N. Rancho Drive, Las Vegas, Nevada 89130,
Attention: Chief Financial Officer.
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IMPORTANT
Any holder of Old Notes who wishes to accept the Exchange Offer or furnish
Consents in the Solicitation should either (a) complete the Amended Letter of
Transmittal and Consent Form (lavender) and forward it with such Old Notes and
any other required documents to the Exchange/Solicitation Agent or (b) request a
broker or bank to effect the transaction for such holder. Holders of the Old
Notes registered in the name of a broker, dealer, bank, trust company or nominee
should contact such institution to tender their Old Notes.
THE EXCHANGE/SOLICITATION AGENT:
IBJ SCHRODER BANK & TRUST COMPANY
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT
DELIVERY:
IBJ Schroder Bank & Trust (212) 858-2611 IBJ Schroder Bank & Trust
Company Company
P.O. Box 84 To Confirm: One State Street
Bowling Green Station (212) 858-2103 New York, NY 10004
New York, NY 10274-0084 Attn: Securities
Attn: Reorganization Processing Window,
Operations Department Subcellar One, (SC-1)
If you have any additional questions, or need
additional copies of the Amended Joint Offering Circular/Consent
Solicitation Statement, the Amended Letter of Transmittal and Consent
Form (lavender) or any other Exchange Offer or Solicitation materials,
please contact the Information Agent or the Company's Chief Financial Officer at
the addresses and/or telephone numbers listed below.
THE INFORMATION AGENT: THE COMPANY:
D.F. King & Co., Inc Thomas K. Land
77 Water Street Chief Financial Officer
20th Floor Pioneer Finance Corp.
New York, NY 10005 4949 North Rancho Drive
Las Vegas, Nevada 89130
Toll Free: (800) 628-8538
or Banks and Brokers Call: (212) 425-1685 (702) 658-4340
