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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): December 23, 1996
VIDEO LOTTERY TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19322 81-0470853
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
115 Perimeter Center Place, Suite 911, Atlanta, GA
30346 (Address of principal executive offices and zip code)
(770) 481-1800
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On December 23, 1996, the Special Committee of the Board of Directors
of Video Lottery Technologies, Inc. (VLT) responded by letter to Mr. William
Spier's letter to the Company dated December 17, 1996. A copy of the letter to
Mr. William Spier is attached as Exhibit 5.1 hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
Exhibit 5.1 Letter by the Special Committee of the Board
of Directors of Video Lottery Technologies,
Inc., to Mr. William Spier, dated December
23, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VIDEO LOTTERY TECHNOLOGIES, INC.
Date: December 23, 1996 /s/ Janet M. Bjork
--------------------
Janet M. Bjork
Assistant Secretary
(authorized to sign on behalf of Registrant)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
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<C> <S> <C>
5.1 Letter to William Spier dated December 23, 1996 5
</TABLE>
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Exhibit 5.1
December 23, 1996
VIA FACSIMILE
AND U.S. MAIL
Mr. William Spier
444 Madison Avenue
38th Floor
New York, NY 10022
Dear Bill:
I am writing in response to your letter of December 17, 1996.
First, my letter of December 9 and the Company's press release of December 12
were appropriate and careful and by no means "schizophrenic." The Board of
Directors is interested in giving prompt and serious consideration to your
offer, and to that end it has appointed a Special Committee, which is proceeding
to study the offer with the help of financial and legal advisors. But the Board
and the Committee are also very properly seeking assurance (a) that any
agreement with a Spier group can and will lead to a prompt closing, and (b) that
a transaction with a Spier group will not result - and not have the appearance
of resulting - from any unfair advantage that you have as a corporate insider.
Everything in my December 9 letter was directed to those points.
Unfortunately, your letter of December 17 ignores some of the serious concerns
expressed. It also misconstrues or misrepresents certain facts and, as a result,
may be misleading to VLT shareholders.
1. You state that Salomon Brothers has advised you that it believes your
proposed transaction is feasible, financeable and likely to close. For the
record, and to end any confusion on this point, Salomon Brothers has not said
any such thing to the Company or the Special Committee. Your December 17 letter
does not answer the Special Committee's questions about the financing that you
contemplate. You say that you have "previously" outlined the structure which
will permit the necessary financing to be obtained without much difficulty," but
the "structure" is nowhere evident in any of your letters describing your
proposal or any discussion you have had with the Board. In fact, you have
consistently avoided describing your financing plans.
Our concern is heightened by the fact that you continue to say you will need a
period of 45 days after an agreement is signed to obtain commitments for
financing; that is further evidence of uncertainty.
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2. With respect to regulatory approvals, the point you miss is that the
transaction that you propose would necessarily take the Company private. Since
every shareholder of a private company must be approved by many regulatory
authorities, we will need more specific assurances than those delivered to date
that the regulatory process will be resolved favorably and in a reasonably short
period of time. At the very least, the Special Committee would be interested in
the opinion of your regulatory counsel with respect to that process, or how you
would insulate VLT from regulatory risk.
3. My letter of December 9 specifically requested that you agree to provide us
with full particulars of all discussions and correspondence between you and your
counsel and other advisors, on the one hand, and potential buyers of divisions
or assets of VLT or other third parties that may be interested in joint ventures
or other dealings with VLT, on the other hand. That information has an obvious
bearing on the fairness of any sale of VLT to an insider. Your letter does not
respond to this specific request.
4. My December 9 letter also specifically asked that you agree that the Special
Committee be charged with deciding, in good faith, what information should be
provided to you and Bill Lyons and what Board discussions you should participate
in. Again, your letter of December 17 offers no response to that request.
Contrary to the assertion in your letter, the Special Committee does not want
you to abdicate any of your responsibilities as a director of VLT, nor is it our
intention to exclude you from Board deliberations in order to silence a
dissenting voice. Our intention, rather, is to ensure that your access to
certain information as a member of the Board does not afford you an improper
advantage over other actual and potential bidders. This is for your protection
as well as that of the shareholders, the Company and the members of the Special
Committee and the Board.
5. Your response to the request in my December 9 letter that you refrain from
any further discussions with EDS is very incomplete. You say that "in the
immediate future, I have no intention of engaging in substantive discussions
with EDS regarding its dispute with VLT and possible resolutions of that dispute
in the context of our acquisition proposal." I do not know what that means, but
it is clear to the Special Committee that you should, under all the
circumstances, have no contact with EDS, direct or indirect, without the
Committee's prior knowledge and approval. In this respect, we are particularly
troubled by your statement, reported on December 18 by the Dow Jones News
Service, that you "still think [you] should have the ability to talk with
[EDS]." That statement seems in direct conflict with the statement of your
intentions in the December 17 letter and your agreement at the Board meeting on
December 18, 1996, not to conduct these discussions.
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Your December 17 letter also fails to respond to the concerns we expressed
regarding contacts between your counsel and Gil Friedlander, General Counsel of
EDS, nor do you specifically agree, as the Special Committee requested, to (a)
refrain from discussions with third parties with whom VLT has dealings, unless
VLT representatives are present and participating, and (b) abide by the Special
Committee's judgment as to whether a particular meeting between you (or your
representatives) and any third party would be contrary to VLT's interest.
Obviously, the Special Committee requires further clarification of your position
regarding discussions with EDS and others.
6. The reference in your letter to your willingness to provide "interim
financial support" is disingenuous. Neither the Company nor the Special
Committee ever requested any such support, and it was clearly not in the best
interests of the Company or its shareholders for you to suggest, in a publicly
filed letter, that the Company was risking default on an important bond. As you
well know, that was not the case.
Your statement of willingness to purchase up to an additional 20% of VLT's
common stock at prices up to $6.00 per share is similarly disingenuous.
Obviously, rather than demonstrating your "commitment to [your] desire to
provide VLT shareholders with a highly beneficial transaction," such purchases
would simply provide you with additional shares at a price below your $6.00
offer price, which would strengthen your position, whether or not the Special
Committee ultimately deems your proposal to be in the best interests of the
Company and its shareholders.
7. Finally, your letter suggest that VLT has been reviewing strategic
alternatives for "more than four years." But you are the only director who has
been on the Board for four years, which is twice as long as Ms. Becker and I
have served.
Let me again stress, in closing, that the Special Committee is proceeding to
consider your proposal promptly and in good faith, but is determined to conduct
this process with the utmost care, consistent with its responsibilities. We
trust that we can expect to hear from you shortly in response to the concerns
described in this letter.
Sincerely,
/s/ Richard Burt
Richard Burt
Chairman, Special Committee
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