<PAGE> 1
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):
May 17. 2000
CAPITAL GAMING INTERNATIONAL, INC.
(Exact name of Registrant as specified in Charter)
New Jersey 0-19128 22-3061189
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
2701 E. Camelback Road, Suite 484, Phoenix, Arizona 85016
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code: (602)-667-0670
--------------
Not Applicable
--------------------------------------------------------------
(Former name and former address, as changed since last report)
<PAGE> 2
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On May 15, 2000 (the "Petition Date"), Capital Gaming International,
Inc., a New Jersey corporation (the "Company"), filed a voluntary petition for
reorganization of the Company under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
District of New Jersey, Case No. 00-14052 (JHW). The Company is in possession of
its property and assets and maintaining and operating its business as
debtor-in-possession pursuant to the provisions of the Bankruptcy Code. No
trustee or receiver has been appointed. The Company's two operating
subsidiaries, Capital Gaming Management, Inc. and Capital Development Gaming
Corp., were not included in the filing and are not debtors. A copy of the press
release issued by the Company on May 16, 2000 in connection with the filing of
the petition is being filed as an Exhibit hereto and is incorporated herein by
reference.
In connection with the filing of the petition, the Company and U.S.
Bank Trust National Association, as Indenture Trustee, jointly submitted a
Disclosure Statement and Plan of Reorganization (the "Plan") for the Company.
The Plan is the result of extensive negotiations among the Company, the
Indenture Trustee, and holders (the "Senior Noteholders") of approximately
eighty-four percent (84%) of the Company's outstanding 12% Senior Secured Notes
due 2001 (the "Senior Notes") and approximately seventy percent (70%) of the
Company's stock. Those parties concluded that the best way to maximize the
Company's value and preserve it as a going concern was to "de-leverage" the
Company by converting the Senior Notes to equity. Although the long-term success
of the Company is dependent upon its ability to obtain new management contracts,
this proposed restructuring will (i) eliminate the uncertainty created by the
existing debt structure; (ii) provide the reorganized Company needed flexibility
for financing future operations; and (iii) provide the reorganized Company with
competitive advantages when competing with better financed competitors.
Under the Plan, the Senior Noteholders will receive on account of the
Senior Notes, which will be cancelled, a distribution of at least $9,000,000 in
cash and 2,068,000 shares of New Class A Common Stock, representing ninety-four
percent (94%) of the aggregate voting securities of the reorganized Company.
General unsecured creditors of the Company will receive a pro rata share of
$100,000, unless their claims are $2,500 or less, in which case they will be
paid in full. Certain holders of the Company's existing stock will receive their
pro rata share of 550 shares of New Class B Common Stock. Existing shares of the
Company's stock will be cancelled.
Although there can be no assurance that the Plan will be confirmed in
its present form or that the transactions contemplated thereby will be
consummated, as of the Petition Date holders of approximately eighty-four
percent (84%) of the outstanding Senior Notes and seventy percent (70%) of the
Debtor's stock had indicated their support of the Plan.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.2. Press Release of Capital Gaming International, Inc., dated May
16, 2000.
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.
CAPITAL GAMING INTERNATIONAL, INC.
Dated: May 17, 2000 By: /s/ William S. Papazian
--------------------------------
Name: William S. Papazian
Title: Executive Vice President
3
<PAGE> 1
Exhibit 99.2
For Further Information:
AT THE COMPANY
William S. Papazian
Executive Vice President
602-667-0670
- ------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
May 16, 2000
CAPITAL GAMING INTERNATIONAL, INC. REPORTS
ON FINANCIAL RESTRUCTURING
Phoenix, Arizona - Capital Gaming International, Inc. (the "Company") (OTC:
CGMI) today reported the successful completion of negotiations with U.S. Bank
Trust National Association, as Indenture Trustee of the Company's Senior Secured
Notes due 2001 ("Senior Secured Notes"), the holders of approximately 84% of the
Senior Secured Notes and the holders of approximately 70% of the Company's
equity interests regarding the economic terms of a voluntary financial
restructuring of the Company. As contemplated by these negotiations, the Company
and its Indenture Trustee yesterday commenced reorganization proceedings and
filed a jointly proposed Plan of Reorganization in the United States Bankruptcy
Court for the District of New Jersey (the "Court").
The Company further reported that its decision to restructure its balance sheet
was consistent with the aggressive posture it was taking with respect to
actively pursuing new gaming opportunities for the Company's subsidiaries. The
Company reported that by de-leveraging the Company by converting its Senior
Secured Notes to a cash payment and equity, the financial reorganization will
eliminate the uncertainty created by the existing debt structure which provides
for a balloon payment of $18,480,000 in principal on the Senior Secured Notes
when they become due in May 2001, provide the Company needed flexibility for
investing in and raising capital for future new gaming projects and provide the
Company with competitive advantages against larger and better capitalized
competitors. The Company further reported that no changes in control or in
management is expected to occur in connection with its financial restructuring.
The Company anticipates having its Plan of Reorganization confirmed by the Court
within the next 60 to 90 days.
The Company has interests in two wholly-owned subsidiaries, Capital Gaming
Management, Inc. and Capital Development Gaming Corp. Yesterday's filing does
not involve the Company's subsidiaries and the Company does not anticipate any
need for a restructuring at the subsidiary level.
The Company further reported that prior to yesterday's filings, it had remained
current on all outstanding interest payments on its Senior Secured Notes since
March 1997, which totaled approximately $6,829,900. In connection with the Plan
of Reorganization, the Company also reported that it is anticipated that the
holders of its Senior Secured Notes would receive approximately $9 million in
cash, and equity, in exchange for the Senior Secured Notes.
Based in Phoenix, Arizona, the Company is a multi-jurisdictional casino
development and management company with interests in Native American gaming
markets.
