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 earliest event reported) February 5, 1997
------------------------
MTR GAMING GROUP, INC.
(exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
33-22521 84-1103135
(Commission File Number) (IRS Employer Identification
Number)
1461 GLENNEYRE STREET, SUITE F, LAGUNA BEACH, CALIFORNIA
(Address of principal executive offices)
92651
(Zip Code)
Registrant's Telephone Number, Including Area Code: (714) 376-3010
--------------
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On February 5, 1997, the Registrant signed a non-binding
letter of intent (the "Letter") with Muskegon Race Course, Inc., a Michigan
corporation, and Sports Valley West Limited Partnership, a Michigan limited
partnership (collectively the "Seller"), that contemplates the lease, operation
and possible acquisition by the Registrant of a 94 acre parcel of land (the
"Real Property") and The Muskegon Racetrack (the "Racetrack" and together with
the Real Property, the "Property"), a horse racing track and off-track betting
facility located in Muskegon, Michigan.
Upon execution of the definitive agreement, the Registrant is
to make a non-recourse loan (the "Loan") to the Seller in the amount of $900,000
in original principal amount for a term of three years, subject to renewal for
an additional three years, at an annual interest rate to be agreed upon by the
parties. All interest and principal shall be due and payable on the maturity
date of the Loan. The Loan is to be secured by a second priority mortgage on the
Property, all permits licenses and approvals (subject to requisite governmental
and regulatory approvals) and subordinate to security interests in all equipment
(subject to certain exclusions) and personalty.
Simultaneously with the funding of the Loan, or as soon
thereafter as all required permits, licenses, and approvals are obtained by the
Registrant from the necessary governmental and regulatory authorities having
jurisdiction over the Property and the parties, the Registrant shall lease the
Property from the Seller under a "triple net" lease (the "Lease") with monthly
rental payments being net to Seller, as landlord, in an amount equal to the
existing amount of Seller's current monthly first mortgage debt payment. Under
the terms of the Lease, the Registrant shall be entitled to the exclusive right
to operate and manage the Property. The initial term (the "Initial Term") of the
Lease is for three years with one three year renewal option for an additional
three year term (the "Renewal Term") granted by the Seller and exercisable by
the Registrant in its discretion.
The Letter also contemplates the Seller granting the
Registrant throughout the term of the Lease (and the renewal period) an option
to purchase the Property. The purchase price will vary depending upon whether
and when the State of Michigan approves additional forms of gaming, such as slot
machines or video lottery, at the Racetrack. The option price includes the
assumption of the existing $2.5 million first mortgage, assumption of the
$900,000 second mortgage Loan to be made by the Registrant, and payment of
either (i) $2.5 million if additional forms of gaming are approved within three
years of the date of commencement of the Lease; (ii) $2 million if such
approvals are in place within six years of the commencement of the Lease; or
(iii) $750,000 if such approvals are not in place within six years.
The Letter is subject to certain contingencies, including the
Registrant's due diligence review, requisite governmental and regulatory
approvals, execution of definitive agreements and certain other closing
conditions.
<PAGE>
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, thereunto duly authorized.
MTR GAMING GROUP, INC.
By: /s/EDSON R. ARNEAULT
------------------------
Edson R. Arneault,
President
Date: February 7, 1997
