<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 20, 1998
Stratosphere Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-12030 88-0292318
(Commission File Number) (IRS Employer Identification No.)
2000 Las Vegas Boulevard South, Las Vegas, Nevada 89104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 382-4446
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On May 15, 1998, in the Chapter 11 proceedings of Stratosphere Corporation and
Stratosphere Gaming Corp. ("Stratosphere") pending in the United States
Bankruptcy Court for the District of Nevada, the Bankruptcy Court entered an
order confirming Stratosphere's Restated Second Amended Plan of Reorganization.
A copy of the press release issued by Stratosphere is attached hereto as an
exhibit.
The following balance sheet was included in the monthly report of operations
filed with the office of the United States Bankruptcy Court on May 19, 1998,
which reflected asset and liability balances as of April 26, 1998.
STRATOSPHERE CORPORATION CONSOLIDATED (1)
(DEBTORS-IN-POSSESSION)
BALANCE SHEET
AS OF APRIL 26, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS $ 6,261,002
CASH IN HOUSE 22,506,321
CASH IN BANK 3,302,278
ACCOUNTS RECEIVABLE, NET 1,854,170
INVENTORIES 1,753,679
PREPAID EXPENSES 23,150
INTEREST RECEIVABLE 552,910
DEPOSITS -------------
TOTAL CURRENT ASSETS 36,253,510
-------------
LAND 21,554,385
LEASEHOLD IMPROVEMENTS 105,154
BUILDING 69,240,466
FURNITURE, FIXTURES & EQUIPMENT 33,422,039
CONSTRUCTION IN PROGRESS 16,262,687
-------------
SUBTOTAL 140,584,731
-------------
LESS: ACCUMULATED DEPR & AMORTIZATION (21,124,741)
-------------
TOTAL PROPERTY, PLANT AND EQIUPMENT 119,459,990
-------------
OTHER ASSETS 596,094
INTERCOMPANY RECEIVABLE - RETAIL CORP 2,000
INVESTMENT IN RETAIL CORP 477,386
OTHER ASSETS -------------
TOTAL OTHER ASSETS 1,075,480
-------------
TOTAL ASSETS $ 156,788,980
=============
</TABLE>
(1) This statement is presented on a consolidated basis and includes all debtor
and non-debtor subsidiaries, except for "Retail Corp".
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STRATOSPHERE CORPORATION CONSOLIDATED (1)
(DEBTORS-IN-POSSESSION)
BALANCE SHEET
AS OF APRIL 26, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES NOT SUBJECT TO COMPROMISE
CURRENT LIABILITIES
ACCOUNTS PAYABLE
$ 975,764
ACCRUED PAYROLL & RELATED EXPENSES 7,399,986
OTHER CURRENT LIABILITIES 7,551,607
------------
TOTAL CURRENT LIABILITIES 15,927,357
LIABILITIES SUBJECT TO COMPROMISE 297,057,566 (2)
------------
TOTAL LIABILITIES 312,984,923
------------
SHAREHOLDERS' DEFICIT
COMMON STOCK 583,931
ADDITIONAL PAID IN CAPITAL 218,546,069
CURRENT YEAR EARNINGS (DEFICIT) 1,708,366
RETAINED EARNINGS (DEFICIT) (377,034,309)
------------
TOTAL EQUITY (156,195,943)
------------
TOTAL LIABILITIES & EQUITY
$156,788,980
============
</TABLE>
(1) This statement is presented on a consolidated basis and includes all debtor
and non-debtor subsidiaries, except for "Retail Corp".
(2) Liabilities subject to compromise consist of the following:
<TABLE>
<S> <C>
First Mortgage Notes $ 223,661,467
Note Payable to affiliate 50,000,000
Grand Casino/Intercompany Payable 2,407,691
Capital Lease Obligations 15,492,325
Accrued Interest on Capital Lease 329,312
Accrued payroll related liabilities 57,898
Other pre-petition liabilities 5,108,873
-------------
Total liabilities subject to compromise $ 297,057,566
=============
</TABLE>
Although classified as a liability subject to compromise, the
Debtors anticipate the continuation of payments on its Capital
Lease Obligations pursuant to a pre-petition standstill agreement
and an order entered by the Bankruptcy Court on March 4, 1997,
approving a stipulation for adequate protection.
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ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit No.
99.1 May 15, 1998 Press Release.
SIGNATURE
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.
STRATOSPHERE CORPORATION
Date: May 20, 1998 By: /s/ Thomas A. Lettero
-----------------------
Name Thomas A. Lettero
Title: Vice President Administration/Chief
Financial Officer
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[STRATOSPHERE LOGO]
Exhibit 99.1
NEWS RELEASE
STRATOSPHERE CORPORATION
2000 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89104
702-380-7777
702-383-4733 (FAX)
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FOR FURTHER INFORMATION CONTACT:
Tom Lettero - (702) 383-5207
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FOR IMMEDIATE RELEASE:
FRIDAY, MAY 15, 1998
BANKRUPTCY COURT ORDERS CONFIRMATION OF PLAN OF REORGANIZATION
FOR STRATOSPHERE CORPORATION
LAS VEGAS, NEVADA, MAY 15, 1998 ... STRATOSPHERE CORPORATION AND
STRATOSPHERE GAMING CORP. ("STRATOSPHERE") today announced that on May 15, 1998,
in the Chapter 11 proceedings of Stratosphere pending in the United States
Bankruptcy Court for the District of Nevada, the Bankruptcy Court entered an
order (the "Confirmation Order") confirming Stratosphere's Restated Second
Amended Plan of Reorganization ("Plan"). The confirmed Plan resulted from
extensive negotiations among various parties and interests.
The confirmed Plan contemplates that Stratosphere will continue its
ongoing operations. The Plan provides for a restructuring of the debts of
Stratosphere, and it provides for a redistribution of all of its equity.
Creditors will receive the distributions provided under the Plan as approved by
the Confirmation Order. Distributions will be made out of cash on hand and cash
flow generated by the ongoing operations of the business. When the Plan
eventually becomes effective (the "Effective Date") after receipt of all
regulatory approvals including from the Nevada State Gaming authorities (which
is expected to occur before the end of the year), the existing board of
directors will be reconstituted with new directors as chosen by the majority
owners of Stratosphere's outstanding First Mortgage Notes.
In summary, the Plan provides for the following to occur: All existing
equity interests in Stratosphere (including all outstanding common stock) will
be canceled and terminated. The First Mortgage Notes also will be extinguished
on the Effective Date. Holders of the First Mortgage Notes will receive their
pro rata distribution of 2,030,000 shares of new common stock in consideration
for the secured portion of their claims either on the Effective Date (or, with
respect to any Noteholder required to obtain the approval of the Nevada State
Gaming authorities, on receipt of such approval), and will be treated as general
unsecured creditors for the balance of their claims. Wage claims, benefit plan
contribution claims, customer deposit claims, secured tax claims and
miscellaneous secured claims are unimpaired under the Plan and will receive
payment in full as provided therein. Certain capital lease claims are impaired
and the terms of such leases are being modified pursuant to the Plan. General
unsecured creditors will receive pro rata recoveries from a fund of $6,000,000
to be paid out on the Effective Date or as soon thereafter as practicable.
While Stratosphere's board of directors will change and a new CEO will
be appointed on the Effective Date of the Plan, Stratosphere's employees and its
continued operations will be unaffected by confirmation of the Plan.
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Stratosphere's First Mortgage Notes are principally held by affiliates
of Carl Icahn and Sky High LLC (formerly held by Grace Brothers, Ltd.) assuming
they receive all required regulatory approvals, it is anticipated that on the
Effective Date the majority of Stratosphere's new common stock will be owned by
such parties. Stratosphere's existing common stock will be canceled as of the
Effective Date.
Stratosphere Corporation is a casino/hotel/entertainment complex
located at the north end of the Las Vegas Strip. The complex is centered around
the Stratosphere tower, the tallest free-standing observation tower in the
United States.
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The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this press
release (as well as information included in oral statements or other written
statements made or to be made by the Company) contains statements that are
forward-looking, such as statements relating to plan for future expansion and
other business development activities as well as other capital spending,
financing sources and the effects of regulation (including gaming and tax
regulation) and competition. Such forward-looking information involves important
risks and uncertainties that could significantly affect anticipated results in
the future and, accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to development and
construction activities, dependence on existing management, leverage and debt
service (including sensitivity to fluctuations in the interest rates), domestic
or global economic conditions, activities of competitors and the presence of new
or additional competition, fluctuations and changes in customer preferences and
attitudes, changes in federal or state tax laws of the administration of such
laws and changes in gaming laws or regulations (including the legalization of
gaming in certain jurisdictions). For more information, review the Company's
filings with the Securities and Exchange Commission, including the Company's
annual report on Form 10-K and certain registration statements of the Company.
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