AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 1996
REGISTRATION NO. 333-3597
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
GRAND CASINOS, INC.
(Exact name of registrant as specified in their charter)
41-1689535
(I.R.S. employer identification number)
MINNESOTA
(State or other jurisdiction of incorporation or organization of registrant)
13705 FIRST AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55441
(612) 449-9092
(Address, including zip code, and telephone number,
including area code, of registrants' principal executive office)
PATRICK R. CRUZEN, PRESIDENT
GRAND CASINOS, INC.
13705 FIRST AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55441
(612) 449-9092
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
RUSSELL F. LEDERMAN, ESQ.
MASLON EDELMAN BORMAN & BRAND,
A PROFESSIONAL LIMITED LIABILITY PARTNERSHIP
3300 NORWEST CENTER
MINNEAPOLIS, MINNESOTA 55402
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE
TO THE PUBLIC: From time to time after the effective
date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check
the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 7, 1996
PROSPECTUS
211,200 SHARES
GRAND CASINOS, INC.
COMMON STOCK
------------------------------------
All of the 211,200 shares of Common Stock, $0.01 par value per share
(the "Common Stock"), of Grand Casinos, Inc. (the "Company") offered hereby are
being sold by certain shareholders (the "Selling Shareholders"). The Company
will not receive any of the proceeds from the sale of shares by the Selling
Shareholders.
The Common Stock is listed on the New York Stock Exchange under the
symbol "GND". On June 6, 1996, the last sale price for the Common Stock as
reported on the New York Stock Exchange Composite Tape was $33.875.
The expenses of this offering, payable by the Selling Shareholders are
estimated to be $13,000.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DESCRIPTION OF CERTAIN
FACTORS WHICH SHOULD BE CONSIDERED BY INVESTORS BEFORE PURCHASING THE SECURITIES
OFFERED HEREBY.
------------------------------------
NEITHER THE MISSISSIPPI GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL
BOARD NOR THE NEVADA GAMING COMMISSION NOR ANY OTHER GAMING AUTHORITY
HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE
INVESTMENT MERITS OF THE SECURITIES OFFERED HEREBY. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THESE SECURITIES HAVE NOT BEEN 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
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------------------
The date of this Prospectus is ___________, 1996.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OFFERED HEREBY TO ANY PERSON
IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS PAGE
ADDITIONAL INFORMATION....................................................2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...........................3
RISK FACTORS..............................................................4
USE OF PROCEEDS...........................................................9
SELLING SHAREHOLDERS ....................................................10
PLAN OF DISTRIBUTION ....................................................10
LEGAL MATTERS............................................................10
EXPERTS ................................................................11
ADDITIONAL INFORMATION
This Prospectus is part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") which has been filed by the Registrants with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), relating to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement. Statements made in this Prospectus as to the contents of
any contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to the exhibit
for a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference.
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such reports, proxy and information statements
and other information as well as the Registration Statement and Exhibits of
which this Prospectus is a part, filed by the Company may be inspected and
copied at the public reference facilities of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as at the
following Regional Offices: 7 World Trade Center, 13th Floor, New York, New York
10048 and 500 West Madison Street--Suite 1400, Chicago, Illinois 60661. Copies
of such material can be obtained from the Commission by mail at prescribed
rates. Requests should be directed to the Commission's Public Reference Section,
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549.
Material filed by the Company can be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, NY 10005.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company filed with the Commission are
incorporated herein by reference:
(i) Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
(ii) Quarterly Reports on Form 10-Q for the fiscal quarter ended
March 31, 1996.
(iii) Current Report on Form 8-K dated June 7, 1996.
(iv) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the date of this
Prospectus and prior to the termination of the offering described herein shall
be deemed to be incorporated by reference in this Prospectus from the respective
dates those documents are filed. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein modifies or supersedes such statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written request of such person, a copy of any
or all of the documents incorporated by reference in this Prospectus (not
including certain exhibits to such documents). Written requests for such copies
should be directed to Timothy J. Cope, 13705 First Avenue North, Minneapolis,
Minnesota 55441-5444.
3
RECENT DEVELOPMENTS
The Company has recently been called upon to loan Stratosphere
Corporation $48.5 million pursuant to a previously agreed upon completion
guaranty. The majority of the funds advanced under the guaranty have been used
to pay for enhancements to the original scope of the project. The Company
currently owns approximately 42 percent of Stratosphere Corporation and had
agreed to provide the guaranty as part of Stratosphere's March 1995 $203-million
First Mortgage Note offering. The loan will bear interest at 14.25 percent and
will be unsecured and subordinate to the First Mortgage Notes.
RISK FACTORS
Each prospective investor should carefully consider the following
factors, among others, prior to purchasing any of the securities offered hereby.
RISKS OF LEVERAGED FINANCIAL POSITION
ABILITY TO SERVICE DEBT
As a result of the completion of the Company's November 30, 1995 public
offering (the "First Mortgage Offering") of 101/8% First Mortgage Notes due 2003
(the "First Mortgage Notes"), the Company has substantial annual debt service
along with other operating expenses. As of December 31, 1995, the Company
(excluding Stratosphere Corporation) had total indebtedness of approximately
$470.6 million, which includes the First Mortgage Notes and approximately $20.6
million of other senior indebtedness, including capitalized lease obligations,
and would have no subordinated indebtedness. As of December 31, 1995, the
Company (including Stratosphere Corporation) had total indebtedness of
approximately $673.6 million. In addition, the Company has additional contingent
obligations with respect to Stratosphere Corporation pursuant to a completion
guarantee and a standby equity commitment. Under the completion guarantee, if
there are insufficient funds to complete the construction of Stratosphere prior
to opening, which occurred in May, 1996, the Company is obligated to provide a
loan in the maximum amount of $50.0 million. The Company has recently been
called upon to loan Stratosphere Corporation $48.5 million pursuant to the
completion guaranty. The majority of the funds advanced under the guaranty have
been used to pay for enhancements to the original scope of the project. The loan
will bear interest at 14.25 percent and will be unsecured and subordinate to the
First Mortgage Notes. See "Recent Developments." Under the standby equity
commitment, if Stratosphere Corporation's consolidated cash flow is less than
$50.0 million during any of the first three years of operation, the Company must
contribute equity to Stratosphere Corporation in an amount equal to the
difference between $50.0 million and Stratosphere Corporation's consolidated
cash flow with a maximum contribution of $20.0 million per year. The First
Mortgage Notes are senior obligations of the Company and rank pari passu in
right of payment with all other senior indebtedness. The First Mortgage Notes
and the note guarantees, as applicable, and certain other permitted senior
indebtedness, including a senior credit facility which the Company intends to
enter into are secured on an equal and ratable basis (with certain exceptions)
4
by substantially all the assets of the Company. The ability of the Company to
make interest payments on the First Mortgage Notes will depend on its ability to
generate sufficient cash flow from operations. There can be assurance that the
Company will be able to generate sufficient cash flows from operations to make
interest payments on the First Mortgage Notes.
RISK OF INCURRENCE OF ADDITIONAL DEBT
The First Mortgage Notes Indenture permits, under certain
circumstances, additional first mortgage indebtedness which would be
collateralized and rank pari passu with the First Mortgage Notes. Such
incurrence will also be subject to certain other conditions. In addition, the
First Mortgage Notes Indenture will permit the Company and its subsidiaries,
under certain circumstances, to incur additional unsecured indebtedness or
indebtedness secured by assets that do not constitute note collateral, such as
future gaming facilities owned or operated by the Company. The ability of the
Company to satisfy its obligations relating to any additional indebtedness will
depend on its operating cash flow. Any inability of the Company to satisfy such
debt obligations could adversely affect he Company's ability to conduct its
operations or finance its capital needs.
RISK OF NEW VENTURE
DEVELOPMENT OF GRAND CASINO TUNICA
Although the Company and certain members of its management have
experience developing and operating casinos, neither the Company nor any of
these individuals has developed or operated a development as large and diverse
as the proposed Grand Casino Tunica project. In addition, the gaming industry in
Tunica County has a relatively short operating history, with the first casino
opening in November 1991 Accordingly, the results of the Tunica County gaming
market to date may not be indicative of future results.
The opening of any facility at Grand Casino Tunica will be contingent
upon the completion of construction, hiring and training of sufficient personnel
and receipt of all regulatory licenses, permits, allocations and authorizations.
The scope of the approvals required to construct and open this facility will be
extensive, and the failure to obtain such approvals could prevent or delay the
completion of construction or opening of all or part of such facilities or
otherwise affect the design and features of Grand Casino Tunica.
Although the Company believes that the opening of Grand Casino Tunica,
other than the golf course and some of the hotel rooms, will occur in June 1996,
no assurances can be given that the opening will occur by that or any other time
or that the budget for Grand Casino Tunica will not be exceeded. Major
construction projects (and particularly one the size and scale of Grand Casino
Tunica) entail significant risks, including shortages of materials or skilled
labor, unforeseen engineering, environmental and/or geological problems, work
stoppages, weather interference, unanticipated cost increases and
non-availability of construction equipment. Construction, equipment or stalling
problems or difficulties in obtaining any of the requisite licenses, permits,
allocations and
5
authorizations from regulatory authorities could increase the total cost, delay
or prevent the construction or opening of Grand Casino Tunica or otherwise
affect the design of Grand Casino Tunica. As of December 31, 1995, the total
land acquisition and construction costs and capitalized interest incurred was
approximately $115.2 million (including approximately $31.4 million for land
acquisitions). In addition, no assurances can be given that the Company will be
able to manage Grand Casino Tunica on a profitable basis or to attract a
sufficient number of guests, gaming customers and other visitors to Grand Casino
Tunica to make its various operations profitable independently.
DEVELOPMENT OF STRATOSPHERE
Although none of the net proceeds of the First Mortgage Notes Offering
were used by the Company to finance development and construction of
Stratosphere, and Stratosphere Corporation is not a guarantor of the First
Mortgage Notes, the Company has contingent obligations with respect to
Stratosphere Corporation pursuant to a completion guarantee (the "Completion
Guarantee") and a standby equity commitment (the "Standby Equity Commitment").
Pursuant to the Completion Guarantee, the Company agreed to complete the Resort
(as defined in that certain Indenture dated as of March 9, 1995 by and between
Stratosphere, Stratosphere Gaming Corp. (the "Guarantor"), and American Bank
National Association, as trustee (the Stratosphere Indenture")) so that it
becomes Operating (as defined in the Stratosphere Indenture), and will guarantee
the payment of all project costs owing prior to such completion. The Company's
obligation to complete the Resort will not take effect unless there are
insufficient funds in the Escrow Account (as defined in the Stratosphere
Indenture) pursuant to the Disbursement and Escrow Agreement (as defined in the
Stratosphere Indenture) to meet the costs of developing, constructing and
opening the Resort.
The Company's obligations under the Completion Guarantee are limited to
$50.0 million in the aggregate. The Company has recently been called upon to
loan Stratosphere Corporation $48.5 million pursuant to the Completion Guaranty.
The majority of the funds advanced under the guaranty have been used to pay for
enhancements to the original scope of the project. The loan will bear interest
at 14.25 percent and will be unsecured and subordinate to the First Mortgage
Notes. See "Recent Developments."
Pursuant to the Standby Equity Commitment, if during each of the first
three full four-quarter periods after the Resort is Operating, Stratosphere's
consolidated cash flow is less than $50.0 million for any such four quarter
period, Stratosphere will be required to raise additional equity in the form of
Capital Stock (as defined in the Stratosphere Indenture)(other than Disqualified
Stock (as defined in the Stratosphere Indenture)) in such amount that will
result in net cash proceeds to Stratosphere in an amount equal to not less than
the difference between $50.0 million and Stratosphere's consolidated cash flow
for such four quarter period (the "Standby Equity Commitment Proceeds");
provided, however, that in no event shall Stratosphere be required to raise more
than $20.0 million for any such four quarter period. The Standby Equity
Commitment also provides that the Standby Equity Commitment Proceeds shall be
contributed to Stratosphere no later than 75 days after the end of such four
quarter period. The Company has agreed to purchase any such Capital Stock not so
purchased by another Person (as defined in the
6
Stratosphere Indenture), subject to certain terms and conditions. The maximum
commitment by the Company for the three years would be $60.0 million.
GAMING INDUSTRY IS HIGHLY COMPETITIVE
The gaming industry is highly competitive. Gaming activities include
traditional land-based casinos; riverboat and dockside gaming; casino gaming on
Indian land; state-sponsored lotteries and video poker in restaurants, bars and
hotels; parimutuel betting on horse racing, dog racing and jai-alai; sports
bookmaking; and card rooms. The casinos owned, managed and being developed by
the Company compete and will in the future compete with all these forms of
gaming, and will compete with any new forms of gaming that may be legalized in
additional jurisdictions, as well as with other types of entertainment. The
Company also competes with other gaming companies for opportunities to acquire
legal gaming sites in emerging and established gaming jurisdictions and for the
opportunity to manage casinos on Indian land. Some of the competitors of the
Company have more personnel and greater financial and other resources than the
Company. Such competition in the gaming industry could adversely affect the
Company's ability to attract customers and thus, adversely affect its operating
results. In addition, further expansion of gaming into new jurisdictions could
also adversely affect the Company's business by diverting its customers to
competitors in such jurisdictions.
HIGHLY REGULATED INDUSTRY
The ownership, management and operation of gaming facilities are
subject to extensive federal, state, provincial, tribal and/or local laws,
regulations, and ordinances, which are administered by the relevant regulatory
agency or agencies in each jurisdiction (the "Regulatory Authorities"). These
laws, regulations and ordinances vary from jurisdiction to jurisdiction, but
generally concern the responsibility, financial stability and character of the
owners and managers of gaming operations as well as persons financially
interested or involved in gaming operations.
Neither the Company nor any subsidiary may own, manage or operate a
gaming facility unless proper registrations, licenses, permits and approvals
(collectively, a "Gaming License") are obtained. An application for a Gaming
License may generally be denied for any cause that a Regulatory Authority deems
reasonable. Most Regulatory Authorities also have the right to license,
investigate and determine the suitability of any person who has a material
relationship with the Company or any of its subsidiaries. In the event a
Regulatory Authority were to find a securityholder to be unsuitable, the Company
may be sanctioned, and may lose its Gaming Licenses if the Company recognizes
any rights in such unsuitable person in connection with such securities. The
Company may be required to repurchase its securities (including the First
Mortgage Notes) at fair market value from securityholders that a Regulatory
Authority deems unsuitable. The Company's Articles of Incorporation authorize
the Company to redeem securities held by persons whose status as a
securityholder, in the opinion of the Board of Directors, jeopardizes Gaming
Licenses of the Company or its subsidiaries.
Once obtained, Gaming Licenses may be submitted to periodic renewal and
generally are not
7
transferable. A Regulatory Authority may at any time revoke, suspend, condition,
limit or restrict a Gaming License for any cause it deems reasonable. Fines for
violations may be levied against the holder of a Gaming License, and in certain
jurisdictions, including Mississippi and Nevada, gaming operation revenues can
be forfeited to the State under certain circumstances. No assurance can be given
that any Gaming Licenses will be obtained by the Company or its subsidiaries or,
if obtained, will be renewed or not revoked in the future. Any revocation,
suspension, condition, limitation or restriction on any of the Company's Gaming
Licenses could have a material adverse effect on the Company. In addition, the
rejection or termination of a Gaming License of the Company or any of its
employees or securityholders in any jurisdiction may have adverse consequences
in other jurisdictions. Certain jurisdictions, including the States of
Mississippi and Nevada, require gaming operations licensed therein to seek
approval from the States of Mississippi and Nevada before conducting gaming in
other jurisdictions. The Company and its subsidiaries may be required to submit
detailed financial and operating reports to Regulatory Authorities.
The political and regulatory environment for gaming is dynamic and
rapidly charging. The laws, regulations and procedures pertaining to gaming are
subject to the interpretation of the Regulatory Authorities and may be amended
Any changes in such laws, regulations or other interpretations could have a
material adverse effect on the Company.
For a more detailed discussion of regulatory requirements, see the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995
incorporated by reference herein.
MANAGEMENT CONTRACTS OF LIMITED DURATION
The Company cannot have an ownership interest in any casino it manages
for Indian tribes. The management contracts for the various Indian-owned casinos
that the Company manages for Indian tribes generally have a term of seven years.
The management contracts for Grand Casino Mille Lacs and for Grand Casino
Hinckley expire April 2, 1998 and May 15, 1999, respectively, and the management
contracts for Grand Casino Avoyelles and Grand Casino Coushatta expire June 3,
2001 and January 16, 2002, respectively. The Company is in the process of
negotiating amendments to its management contracts for Grand Casino Mille Lacs
and for Grand Casino Hinckley. The Company must submit its management contracts,
as amended, and certain ancillary loan agreements, to the National Indian Gaming
Commission ("NIGC") which has the right to review management contracts. The
Company does not believe that such amendment and restatement will have a
material effect on the Company. Furthermore, there can be no assurance that any
of these agreements or any other management contract will he renewed upon
expiration or approved by the NIGC upon any such review. The failure to renew
the Company's management contracts would result in the loss of revenues to the
Company derived from such contracts which would have an adverse effect on the
Company.
MANAGEMENT CONTRACTS SUBJECT TO GOVERNMENTAL MODIFICATION
The NIGC has the power to require modifications to Indian management
contracts under
8
certain circumstances or to void such contracts or ancillary agreements
including loan agreements if the management company falls to obtain requisite
approvals or to comply with applicable laws and regulations. While the Company
believes that its management contracts meet the requirements of the Indian
Gaming Regulatory Act (the "IGRA"), the NIGC has the right to review each
contract and has the authority to reduce the term of a management contract or
the management fee or otherwise require modification of the contract, which
could have an adverse effect on the Company. In addition, the Company has made
loans to Indian tribes in excess of the loan ceilings set forth in each of the
Indian management contracts. Such loans have not been and may need to be
approved by the BIA and/or NIGC.
LIMITED RECOURSE AGAINST TRIBAL ASSETS
The Company has made, and will make, substantial loans to tribes for
the construction, development, equipment and operations of casinos managed and
to be managed by the Company. The Company' only recourse for collection of
indebtedness from a tribe or money damages for breach or wrongful termination of
a management contract is from revenues, if any, from casino operations. The
Company has subordinated, and may in the future subordinate, the repayment of
the Company' loans to a tribe and other distributions due to the Company from a
tribe or other obligations of the tribe related to the casino operations.
Accordingly, in the event of a default by a tribe, the Company's loans to a
tribe will not be repaid until the tribe's senior casino-related creditors have
been repaid in full.
GRAND CASINO GULFPORT--POTENTIAL EARLY TERMINATION OF LEASE
On May 21, 1992, the Company entered into a lease (the "Port Lease")
with the Mississippi State Port Authority (the "Authority") for the Grand Casino
Gulfport mooring site and adjoining land for five years with renewal options
totaling 45 years. The Authority has the option to cancel the Port Lease at any
time upon 12 months' written notice if the Authority expands its own facilities
to handle expanded shipping and related commerce activities. The Authority's
liability to Grand Casino Gulfport upon such cancellation is limited to the
depreciated value of the leased property (which does not include the casino).
Although the Company does not believe that the Authority will exercise its
option to cancel the Port Lease, any such cancellation would require the Company
to find substitute property suitable for mooring Grand Casino Gulfport, which,
if not then available on terms acceptable to the Company, would cause Grand
Casino Gulfport to cease operations. In addition, all mooring sites would need
to be approved by the Mississippi Gaming Commission.
SEVERE WEATHER CONDITIONS ON THE GULF COAST
Grand Casino Gulfport and Grand Casino Biloxi are constructed on barges
located adjacent to Gulf-front property and are subject to the risk of severe
weather, including high winds, water action and hurricanes. In the event of
severe weather, the Company has plans to securely moor the barges to their
mooring sites or to evacuate the casinos to the back-hay area of Biloxi. The
Company also maintains insurance policies that contain casualty cost and certain
business interruption coverage for casualties resulting from severe weather,
including hurricanes. However, a hurricane or other
9
severe weather could cause significant physical damage to Grand Casinos Gulfport
and Biloxi and for a period of time reduce the number of people traveling to the
Gulf Coast, either of which could have a material adverse effect on the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares
offered hereby by the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth the number and percentage of shares of
the Common Stock owned by each Selling Shareholder as of the date hereof and
after giving effect to this offering. The Company will not receive any proceeds
from the sale of the Common Stock by the Selling Shareholders.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to the Offering After the Offering
--------------------- ------------------
Number of Number of
Name and Address Shares Percentage Shares Percentage
---------------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Kenneth Brimmer 89,190 * 6,690 *
Jack Malisow 136,650 * 7,950 *
</TABLE>
*less than 1%
PLAN OF DISTRIBUTION
The shares offered hereby were originally issued in a private placement
in October, 1991 to the Selling Shareholders. This Registration Statement is
being filed by the Company at the expense of the Selling Shareholders. The
Company has agreed to use its best efforts to keep this Registration Statement
effective for a period of 9 months following the date on which the registration
statement was declared effective.
The Selling Shareholders and/or their pledges, donees, transferees or
other successors in interest will sell the securities of the Company covered by
this Prospectus to the public on the New York Stock Exchange or in negotiated
transactions, or otherwise, at prices and on terms then obtainable.
Broker-dealers either may act as agents for the Selling Shareholders and/or
their pledgees, donees, transferees or other successors in interest for such
commissions as may be agreed upon at the time, or may purchase any of the
securities covered hereby as principals and thereafter may sell such securities
from time to time in the over-the-counter market or in negotiated transactions,
or otherwise, at prices and on terms then obtainable.
10
LEGAL MATTERS
Certain legal matters in connection with the validity of the securities
offered hereby will be passed upon for the Company by Maslon Edelman Borman &
Brand, a Professional Limited Liability Partnership, Minneapolis, Minnesota.
Neil I. Sell, a director of the Company, is a partner at Maslon Edelman Borman &
Brand, a Professional Limited Liability Partnership. Mr. Sell beneficially owns
1,284,598 shares of Common Stock, which includes 1,242,000 shares beneficially
owned as trustee, and other partners of Maslon Edelman Borman & Brand, a
Professional Limited Liability Partnership, beneficially own 3,853 shares of
Common Stock.
EXPERTS
The Consolidated Financial Statements of the Company as of December 31,
1995, which are incorporated by reference herein and in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
The Consolidated Financial Statements of the Company as of January 1,
1995 and January 2, 1994 and for the two-year period ended January 1, 1995 have
been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
On May 8, 1995, the Company, with the approval of its Board of
Directors, engaged Arthur Andersen LLP as the independent accountants for the
Company and its subsidiaries. Prior to the engagement of Arthur Andersen LLP,
KPMG Peat Marwick LLP had served as the principal independent certified public
accountants for the Company and its subsidiaries. The report on the Company's
Consolidated Financial Statements prepared by KPMG Peat Marwick LLP for the
years ended January 1, 1995 and January 2, 1994, contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. In connection with the audits for the
years ended January 1, 1995 and January 2, 1994 and through May 8, 1995, there
have been no disagreements with KPMG Peat Marwick LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
KPMG Peat Marwick LLP, would have caused KPMG Peat Marwick LLP to make reference
to the subject matter of the disagreements in its report. During the years ended
January 1, 1995 and January 2, 1994 and through May 8, 1995, the Company has not
consulted with Arthur Andersen LLP on items which (1) were or should have been
subject to Statement of Auditing Standards 50 or (2) concerned the subject
matter of a disagreement or reportable event with the former independent public
accountant.
11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution
of the securities registered hereby, other than underwriting discounts and fees,
are set forth in the following table:
SEC registration fee $2,448.83
Legal fees and expenses 5,000.00
Accounting fees and expenses 5,000.00
Miscellaneous 551.17
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Total $13,000.00
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is governed by Minnesota Statutes Chapter 302A.
Minnesota Statutes Section 302A.521 provides that a corporation shall indemnify
any person made or threatened to be made a party to any proceeding by reason of
the former or present official capacity of such person against judgments,
penalties, fines, including, without limitation, excise taxes assessed against
such person with respect to an employee benefit plan, settlements, and
reasonable expenses, including attorney's fees and disbursements, incurred by
such person in connection with the proceeding, if, with respect to the acts or
omissions of such person complained of in the proceeding, such person has not
been indemnified by another organization or employee benefit plan for the same
expenses with respect to the same acts or omissions; acted in good faith;
received no improper personal benefit and Section 302A.255, if applicable, has
been satisfied; in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and in the case of acts or omissions by
persons in their official capacity for the corporation, reasonably believed that
the conduct was in the best interests of the corporation, or in the case of acts
or omissions by persons in their capacity for other organizations, reasonably
believed that the conduct was not opposed to the best interests of the
corporation.
As permitted by Section 302A.251 of the Minnesota Statutes, the
Articles of Incorporation and Bylaws of the Registrant provides that a director
shall have no personal liability to the Registrant and its shareholders for
breach of his fiduciary duty as a director, to the fullest extent permitted by
law.
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ITEM 16. EXHIBITS.
Exhibit No. Description of Exhibit.
* 5 Opinion of Maslon Edelman Borman & Brand, a Professional Limited
Liability Partnership re: legality.
*23(1) Consent of KPMG Peat Marwick LLP.
*23(2) Consent of Arthur Andersen LLP.
*23(3) Consent of Arthur Andersen LLP.
*23(4) Consent of Maslon Edelman Borman & Brand, a Professional Limited
Liability Partnership (included in Exhibit 5).
*24 Power of Attorney (included on signature page ).
- ----------
*previously filed
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of the Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the
time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
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For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filling of any employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the Prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Minneapolis, State of Minnesota, on June 7, 1996.
GRAND CASINOS, INC.
Registrant
By:/s/ Lyle Berman
Lyle Berman,
Chief Executive Officer
KNOWN ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Patrick R. Cruzen, Timothy J. Cope and
Russell F. Lederman, each or any of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
and to file the same with all exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes, may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 7th day of June, 1996 by the
following persons in the capacities indicated:
NAME TITLE
/s/ Lyle Berman Chief Executive Officer and Director
Lyle Berman (Principal Executive Officer)
* President and Director
Patrick R. Cruzen
* Executive Vice President and Director
Stanley M. Taube
* Executive Vice President and Director
Thomas J. Brosig
* Director
Morris Goldfarb
* Director
David L. Rogers
* Director
Neil I. Sell
* Director
Joel N. Waller
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* Director
Ronald J. Kramer
/s/ Timothy J. Cope Chief Financial Officer (Principal Financial
Timothy J. Cope and Accounting Officer) and Secretary
*The undersigned by signing his name hereunto has hereby signed this
Registration Statement on behalf of the above-named officers and directors, on
June 7, 1996, pursuant to a power of attorney executed on behalf of each such
director and officer and filed with the Securities and Exchange Commission.
BY: /s/ Timothy J. Cope
Timothy J. Cope
Attorney-in-Fact
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