SCHEDULE 14A
SCHEDULE 14 INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Name of Registrant as Specified in Its Charter:
Santa Fe Gaming Corporation
Name of Person(s) Filing Proxy Statement:
Hotel Employees & Restaurant Employees International Union
Payment of Filing Fee (check the appropriate box)
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1),
or 14a-6(j) (2).
[X ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
_____________________________________________________________
2) Aggregate number of securities to which transaction
applies:
_____________________________________________________________
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11: (1)
_____________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________
(1) Set forth the amount on which the filing fee is
calculated and state how it was determined.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
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1) Amount previously paid:
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Date Filed: _______________________________
<PAGE>
<PAGE>
PROXY SOLICITATION
ELECT INDEPENDENT CANDIDATES BRADHAM AND SIRIS TO SANTA FE
GAMING'S BOARD OF DIRECTORS
April 8, 1999
ANNUAL STOCKHOLDERS MEETING
April 30, 1999, 10:00 a.m.
Pioneer Hotel & Gambling Hall
2200 South Casino Drive
Laughlin, Nevada 89028
Hotel Employees & Restaurant Employees International Union
1219 28 Street NW
Washington D.C. 20007
Tel.(888) 273-4564
Fax (202) 333-6049
Dear Santa Fe Gaming Preferred Shareholder:
For the first time, you have the right to elect two
Special Directors to represent you on the Company's Board of
Directors.
This is a critically important opportunity for all
Preferred Shareholders in light of the financial crisis that
confronts Santa Fe Gaming.
At this year's Annual Meeting, two slates of Special
Directors will be submitted: one by the Company's Board of
Directors and one by Preferred Shareholders themselves.
Given the need for independent representation on the
Company's Board, we urge you to vote for two well-qualified,
independent candidates nominated by your fellow Preferred
Shareholders:
1. Mr. John M. Bradham was nominated by the Company's Largest
Preferred Shareholder, Hudson Bay Partners, L.P. Mr. Bradham
is an attorney with substantial experience in the areas of
bankruptcy law and representing hospitality industry
clients.
2. Mr. Peter J. Siris, a Preferred Shareholder who nominated
himself and is endorsed by Hudson Bay, has more than 20
years of direct experience turning around troubled companies
and is a well-respected financial analyst and investment
banker, with expertise in the real estate and hospitality
industries.
HERE International Union's Las Vegas affiliates, Locals
226 and 165, own Common and Preferred Stock in the Company and
represent approximately 600 employees at the Company's Santa Fe
Hotel & Casino, where they are negotiating for a collective
bargaining agreement. Section III of the enclosed Proxy
Statement contains more information.
Again, this vote is a critically important opportunity
for all Preferred Stockholders, given the financial crisis that
confronts Santa Fe Gaming.
We urge you to complete and return the enclosed PROXY
promptly in the postage-paid envelope provided.
ELECT INDEPENDENT CANDIDATES BRADHAM AND SIRIS TO THE
SANTA FE GAMING BOARD OF DIRECTORS.
Sincerely,
Matthew Walker
Research Director
HERE International
Union <PAGE>
[PRELIMINARY] PROXY STATEMENT
For release to shareholders April 8, 1999
ANNUAL STOCKHOLDERS MEETING
April 30, 1999, 10:00 a.m.
Pioneer Hotel & Gambling Hall
2200 South Casino Drive
Laughlin, Nevada 89028
Hotel Employees & Restaurant Employees International Union
1219 28 Street NW
Washington D.C. 20007
Tel. (888) 273-4564
Fax (202) 333-6049
I. ELECT INDEPENDENT NOMINEES BRADHAM AND SIRIS AS SPECIAL
DIRECTORS TO SANTA FE GAMING'S BOARD OF DIRECTORS.
For the first time, holders of the Exchangeable
Redeemable Preferred Stock of Santa Fe Gaming Corp. (the
"Company") have the right to elect two Special Directors to
represent their interests on the Company's Board of Directors.
This is a critically important opportunity for all
Preferred Stockholders in light of the financial crisis that
confronts Santa Fe Gaming.
Mr. Lowden, Chairman of the Board of Santa Fe Gaming, has
always owned over 50% of the company's voting Common Stock. As
such, Mr. Lowden has controlled the election of the Board of
Directors since the issuance of the Preferred Stock in October
1993.
Since that time, Santa Fe Gaming's financial condition
has been marked by the following:
1. Preferred Shareholders' capital account as of December 31,
1998 was $22.5 million. However the Company's current
financial arrangements prohibit it from paying cash
dividends to Preferred Shareholders.
2. The Company has only had one profitable year since
October1993.
3. The Company's Form 10-Q, filed February 16, 1999 with the
SEC, shows an accumulated deficit of $118,817,380 and a
stockholders' equity of negative $44,822,732 as of December
31, 1998.
4. The Company's Independent Auditors Report dated December
23,1998, prepared by Deloitte & Touche states: "The
Company'sinability to meet the repayment terms of the 13
1/2% Notes, its net losses, and its stockholders' deficiency
raise substantial doubt about its ability to continue as a
going concern."
Preferred Shareholders need independent representation on
the Company's Board of Directors.
Two well-qualified, independent candidates have been
nominated by your fellow Preferred Shareholders: Mr. John M.
Bradham, who was nominated by the largest Preferred
Shareholder, Hudson Bay Partners, L.P., and Mr. Peter J. Siris,
a Preferred Shareholder who nominated himself.
JOHN M. BRADHAM:
John M. Bradham is a Partner in the law firm of Peabody &
Brown where he has practiced since 1997. He works in the
firm's Washington, D.C. office, where he practices commercial
litigation and is a member of the firm's Hospitality Practice
Group, counseling hospitality industry clients in both
litigation and non-litigation matters. Mr. Bradham is also
experienced in the area of bankruptcy law and has worked on a
number of major bankruptcy cases. From 1993 to 1997, Mr.
Bradham practiced law with the firm of Akin, Gump, Strauss,
Hauer & Feld. Prior to that, he practiced at Cadwalader,
Wickersham & Taft. Mr. Bradham is a 1987 graduate of Cornell
Law School, and a 1984 graduate of Davidson College. He resides
in Washington, D.C.
Mr. Bradham owns no Preferred or Common Shares of the
Company.
Address:
1255 23 St NW
Washington, D.C. 20037-1170
Telephone: 202-973-7727
Fax: 202-973-7750
PETER J. SIRIS:
Peter J. Siris has been President of The Siris Group, an
investment management and consulting firm since 1996. Since
April 1998, Mr. Siris has been a Director of Crown American
Realty Trust, a real estate investment trust investing in
shopping malls and hotels. He was also a member of the Board of
Directors of Crown American Corporation, predecessor to Crown
American Realty Trust, in 1992 and 1993, and was involved in
turning the company around through a non-bankruptcy
restructuring. In 1996, Mr. Siris was Senior Vice President of
ABN-Amro-Chicago Corp. In 1995, he was Senior Vice President of
Warnaco and its affiliate Authentic Fitness, two retail
businesses. From 1990 to 1995, Mr. Siris was Managing Director
of UBS Securities, focusing on analysis of retail companies and
investment banking work, including corporate restructurings.
From 1983 to 1990, he was Executive Vice President and Director
of Buckingham Research Group. From 1974 to 1979, Mr. Siris was
involved in the turnaround and restructuring of Sirco
International as its Executive Vice President and Director. Mr.
Siris earned an MBA with Distinction from the Harvard Graduate
School of Business Administration in 1968. He is the author of
Guerrilla Investing, which presents strategies and techniques
for individual investors.
Mr. Siris owns or controls 128,900 Preferred Shares in the
Company, which represents 1.5% of the outstanding shares.
Address:
166 Bank Street
New York, NY 10014
Telephone: 212-692-7692
Fax: 212-692-7690
II. VOTING RIGHTS AND PROCEDURES
This solicitation is only for Preferred Stockholders.
According to the Certificate of Designation of the Exchangeable
Redeemable Preferred Stock, at any time that dividends in an
amount equal to dividend payments for four Dividend Periods
have accrued and remain unpaid, holders of the Preferred Stock
will have the right to a separate class vote to elect two
Special Directors to the board of directors. The Company has
failed to pay dividends for the last four dividend periods.
The Company's Board of Directors will also nominate
candidates for election as Special Directors. The current Board
of Directors was elected entirely by the vote of Common
Shareholders, which vote is controlled by Mr. Lowden, given his
majority stake in the Company's Common Stock.
These Special Directors will serve in addition to the
directors elected by the Common Stockholders, for whom you
cannot vote. There are currently 6 directors, three of whom
will be up for election at the Annual Meeting. We offer no
assurance that management's nominees will agree to serve with
the Independent Nominees.
We will keep all Proxies confidential until the Annual
Meeting, unless ordered otherwise by a court. You can readily
revoke your proxy if you so desire. A proxy can be revoked at
any time prior to the Annual Meeting by delivering the
proxyholder or the Company written notice of revocation. The
Company's offices are at 4949 North Rancho Drive, Las Vegas NV
89130, fax (702) 658-4304, tel (702) 658-4300.
If you sign the enclosed proxy but do not mark how it
should be voted, it will be voted FOR election of Bradham and
Siris. Preferred shareholders have no right to vote except for
special directors under the conditions noted above, and for
those extraordinary transactions affecting preferred holders'
rights listed in section 5 of the Certificate of Designation
for the preferred stock. We know of no such extraordinary
transactions to be voted upon. The enclosed proxy grants us no
discretionary authority.
Special Directors are elected by plurality of shares
voted for each seat. Each preferred share carries one vote for
each vacancy. There were 8,856,651 shares of preferred stock
outstanding as of September 30, 1998, with Hudson now owning
approximately 31.5%, Siris 1.5%, and HERE less than 1%.
We incorporate by reference the information contained in
the Company's Proxy Statement on voting rights and procedures
(pp. __), including information regarding the Company's nominees
for Special Directors, nominees for Directors voted on only by
Common Shareholders, and the amount of each class of shares
outstanding.
III. SOLICITATION AND PARTICIPANTS
The participants in this solicitation will be the Hotel
Employees & Restaurant Employees International Union ("HERE")
and its Las Vegas affiliate Local 226, and the Independent
nominees. Over five years ago, Locals 226 and 165 of HERE
were elected to represent approximately 600 employees of the
Company's Santa Fe Hotel & Casino in Las Vegas. The Locals are
in negotiations with the hotel over the terms of a collective
bargaining agreement. The parties have substantial differences
but no strike has occurred or been called. In the past, the
General Counsel of the National Labor Relations Board issued
complaints against the Company's Santa Fe Hotel and the Pioneer
Hotel due to charges filed by the Locals. An NLRB case
resulting from unilateral changes by management in employment
terms, including changes to health insurance, was settled in
principle last year, with liability not yet liquidated but
estimated at several hundred thousand dollars.
While we hope the Independent Nominees might persuade
management to take a different approach to labor relations --
thereby avoiding such liabilities in the future -- we have
received no assurances from the Independent Nominees concerning
labor relations, and do not ask for your support in labor
matters. Neither Independent Nominee has worked for or received
any compensation from HERE or its affiliates. We have never
offered to trade our activities as a Company shareholder for
labor concessions, and do not know what impact if any these
shareholder activities will have on labor negotiations. The
Locals' Joint Executive Board has owned seven shares of Common
Stock and five shares of Preferred Stock for at least five
years. HERE and the Locals will bear the costs of this
solicitation, which are estimated at $5,000 and may include use
of a professional solicitor. We will not seek reimbursement
from the Company. In addition, regular staff of HERE and the
Locals will solicit proxies, for which they will receive no
added compensation. Proxies will be sought by mail, and may
be sought by fax, telephone and personal interview. The persons
named on the Proxy Card are HERE Research Director Matthew
Walker and Local 226 Research Director Courtney Alexander.
Local 226's address is 1630 S. Commerce St., Las Vegas NV
89102, tel. (702) 387-7082; fax (702) 385-1197.
Other than the nominees' consent to be named in these
solicitation materials and HERE's indemnification of the
Independent Nominees against claims arising from this
solicitation, none of the participants have any contracts,
arrangements or understandings with anyone else concerning the
Company or its securities, including employment by the company,
their conduct as directors if elected, or future transactions
involving the Company. Neither Mr. Bradham nor Mr. Siris
intends to solicit holders personally; their role in this
solicitation has consisted solely of providing disclosures
concerning themselves. Other than Mr. Siris' purchasing
preferred stock, which he may continue after this proxy
statement has been prepared, the Independent Nominees have not
had any transactions in the Company's stock or with the
Company. Mr. Siris' transactions in the Company's Preferred
Stock occurred as follows: 35,000 shares purchased during
January 1999, 25,100 shares purchased during February 1999, and
68,800 shares purchased during March 1999. No purchases
occurred before January 1999.
IV. INFORMATION ON NOMINATOR HUDSON BAY PARTNERS
The general partner of nominator Hudson Bay Partners,
L.P. ("Hudson") is Hudson Bay Partners, Inc., of which Mr.
David Lesser is President, sole director and sole shareholder.
The address of Hudson and Mr. Lesser is 237 Park Avenue, Suite
900, New York, New York, 10017, telephone (212) 692-3622.
According to Hudson Bay Partners, L.P.'s 13D Amendment filed
with the SEC on March 16, 1999, Hudson beneficially owns
2,787,400 preferred shares, or 31.5% of the Preferred Stock. We
incorporate by reference herein the Schedule 13D forms filed by
Hudson (available from www.sec.gov or by contacting us). These
show Hudson has increased its stake in the preferred stock in
recent months.
According to Hudson's Schedule 13D filed on January 25,
1999:
"The Filing Persons acquired the Shares described at Item
5(c) below for investment purposes. The Filing Persons have
recently held discussions with the Issuer regarding the
possibility of an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, involving the Issuer,
or a change in the present board of directors of the Issuer.
The Filing Persons have been advised that the Issuer has
determined to take no further action with respect to any such
corporate transaction or change in the board of directors of
the Issuer at this time. The Filing Persons intend to continue
to consider various alternative courses of action and will in
the future take such actions with respect to their respective
equity ownership in the Issuer as each Filing Person deems
appropriate in light of the circumstances existing from time to
time. Such actions may include making recommendations to
management concerning various business strategies,
acquisitions, dividend policies and other matters, pursuing a
transaction or transactions involving a change in control of
the Issuer or such other actions as each Filing Person may deem
appropriate. Such actions also may involve the purchase of
additional Shares or, alternatively, may involve the sale of
all or a portion of the Shares beneficially owned by such
Filing Person in the open market or in privately negotiated
transactions to one or more purchasers.
"In addition, the Filing Persons, as holders of certain
bonds guaranteed by the Issuer, were among a group of creditors
of the Issuer that filed an involuntary petition under Chapter
7 of Title 11 of the United States Code (the "Bankruptcy Code")
against the Issuer.
"Except as described herein, neither Hudson Bay, the
General Partner, nor Mr. Lesser has any plans or proposals
which relate to or would result in (a) the acquisition by any
person of additional securities of the Issuer or the
disposition of any such securities, (b) an extraordinary
corporate transaction, such as a merger, reorganization or
liquidation, involving the Issuer or any of its subsidiaries,
(c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries, (d) any change in the
present management of the Issuer, (e) any material change in
the present capitalization or dividend policy of the Issuer,
(f) any other material change in the Issuer's business or
corporate structure, (g) any other material change in the
Issuer's charter, bylaws or instruments corresponding thereto
or other actions which may impede the acquisition of control of
the Issuer by any person, (h) causing a class of securities of
the Issuer to be delisted from a national securities exchange
or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities
association, (i) a class of equity securities of the Issuer
becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934, or (j)
any action similar to any of the enumerated in (a) through (i)
above."
(Hudson Bay Partners, LP Schedule 13D, January 25, 1999,
page 5.)
The Form 13D was amended by Hudson Bay on March 16, 1999,
making the following disclosure:
"Since the date of filing of the Schedule 13D, the Filing
Persons have continued to pursue various alternative courses of
actions in respect of their respective equity ownership in the
Issuer, including actions that may result in an extraordinary
corporate transaction involving the Issuer, changes in the
board of directors of the Issuer and changes in the management
of the Issuer. In particular, as holders of the Shares having
the right to elect two additional directors to the board of
directors of the Issuer, the Filing Persons have proposed a
slate of four nominees for election to the board of directors
of the Issuer and proposed one nominee included in a slate of
nominees for election to the board of directors of the Issuer
by the Hotel Employees & Restaurant Employees International
Union.
On February 4, 1999, the Issuer moved to dismiss the
involuntary bankruptcy proceeding referred to in the Schedule
13D."
(Hudson Bay Partners, LP Schedule 13D Amendment, March
16, 1999)
As noted in its 13D and Amendment, Hudson has interests
in the Company in addition to owning preferred stock: it is
also a bondholder in Pioneer Finance Corporation, a subsidiary
of the Company and recipient of guaranties by the Company.
Pioneer Finance failed to pay principal and interest due on its
bonds at the December 1, 1998 maturity, and Santa Fe Gaming
failed to make that payment under its guaranty. In January
1999, Hudson initiated discussions with management concerning
the default by Pioneer Finance. Those discussions included a
proposal, which was rejected by the Company, to convert Pioneer
bonds into stock and to change the composition of the Board of
Directors. Since January 1999, Hudson and eleven other
creditors have filed an involuntary bankruptcy petition against
Pioneer Finance and Santa Fe Gaming Corp. On February 23, 1999,
Pioneer Finance Corp. filed a voluntary petition under Chapter
11 of the Bankruptcy Code.
Management filed a motion to dismiss the petition against
Santa Fe Gaming Corp. On March 19, 1999, the Judge dismissed
the Santa Fe Gaming case on the condition that "all insiders,"
as defined by the Bankruptcy Code, waive the statute of
limitations on potential fraudulent conveyances and preference
payments. If "all insiders" do not formally consent to waive
these limitations, the case will instead be suspended until the
end of the exclusivity period in the Pioneer Finance case. In
conjunction with this ruling, the Judge terminated the
automatic stay against Santa Fe Gaming, allowing lawsuits to be
filed against the Company.
While bankruptcy may serve preferred holders' interests
through judicial monitoring of management's conduct, bankruptcy
may instead adversely affect preferred holders' interests: no
assurances can be offered in this regard.
After management learned of opposition in the election
for Special Directors, the Company sued Hudson Bay in U.S.
District Court in Las Vegas, making various allegations
regarding Hudson Bay's ownership of Preferred Shares. The
lawsuit seeks among other things to prevent Hudson Bay from
voting its Preferred Shares in this election of Special
Directors.
IV. EXECUTIVE COMPENSATION/ SECURITY OWNERSHIP OF DIRECTORS,
EXECUTIVE OFFICERS AND 5% OWNERS/ DEADLINE FOR SHAREHOLDER
PROPOSALS
We have no more current information on these subjects than
in the Company's 1998 proxy statement (pp. 11), incorporated
herein by reference. Updated information should be contained in
the Company's 1999 proxy statement, also incorporated herein by
reference.
For more information, contact HERE Research at (702) 387-7082
or 888-273-4564 toll free.
ELECT BRADHAM AND SIRIS AS SPECIAL DIRECTORS REPRESENTING
PREFERRED STOCKHOLDERS ON SANTA FE GAMING'S BOARD
<PAGE>
SOLICITED BY HERE INTERNATIONAL UNION
ELECT INDEPENDENT NOMINEES BRADHAM AND SIRIS AS SPECIAL
DIRECTORS AT SANTA FE GAMING'S 1999 ANNUAL MEETING.
The undersigned, owner of the Exchangeable Redeemable
Preferred Stock of Santa Fe Gaming Corporation, hereby appoints
Matthew Walker and Courtney Alexander proxies with full power
of substitution to vote for the undersigned at the 1999 annual
meeting of Santa Fe Gaming Corporation, and at any adjournments
thereof, on the matters set forth in the Proxy Statement. The
undersigned hereby directs this proxy be voted in accordance
with the instructions herein and grants no discretionary
authority. If not marked otherwise, this proxy will be voted
FOR election of Mr. Bradham and Mr. Siris.
I. ELECTION OF DIRECTORS:
Independent Nominees:
Mr. John M. Bradham
Mr. Peter J. Siris
[ ] FOR all said Independent Nominees
[ ] WITHHOLD AUTHORITY for all said Independent Nominees
Instruction: If no box is marked above, this proxy will be
voted FOR the election of both nominees as Special Directors.
To withhold authority to vote for election of one of the above
nominees, mark FOR above and cross out name of person with
respect to whom authority is withheld.
PLEASE DATE, SIGN AND PROMPTLY MAIL IN THE POSTAGE-PAID
ENVELOPE PROVIDED. PERSONS SIGNING IN REPRESENTATIVE CAPACITY
SHOULD INDICATE AS SUCH. IF SHARES ARE HELD JOINTLY, BOTH
OWNERS SHOULD SIGN.
SIGNATURE ________________________________ DATE ___________
________________________________ DATE ___________
PRINT NAME ________________________________
ADDRESS _____________________________________________________
_____________________________________________________
___________________ ___________ _____________________
ACCOUNT NO./SSN # OF SHARES TEL. NO./FAX NO.
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