CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Definitive proxy statement
/X/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Showboat, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Showboat, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the Appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i), or 14a-6(j)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6)i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
(1) Title of each class of securities to which transaction applies:
9-1/4% First Mortgage Bonds due 2008
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- -------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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SHOWBOAT HOTEL, CASINO & BOWLING * LAS VEGAS
Las Vegas * Nevada * 89104
2800 Fremont Street * Phone (702) 385-9124
June 17, 1994
Holders of:
9-1/4% First Mortgage Bonds due 2008
of Showboat, Inc.
Ladies and Gentlemen:
Showboat, Inc. ("Showboat"), is soliciting the consent
of the holders (the "Holders") of its 9-1/4% First Mortgage Bonds
due 2008 (the "Bonds") to certain modifications (the
"Amendments") to the indenture pursuant to which the Bonds were
issued (the "Indenture"). Showboat had previously provided to
the Holders a consent solicitation statement dated June 1, 1994.
Enclosed with this letter is the Consent Solicitation Statement
which supplements and modifies the June 1, 1994 Consent
Solicitation Statement as of June 17, 1994. Terms not otherwise
defined herein have the meanings assigned to them in the
Indenture or the proposed Amendments.
As compensation for your consent to the proposed
Amendment, as supplemented and modified, Showboat will pay to
Holders who consent to the proposed Amendments, a cash fee equal
to two percent (2%) of the outstanding principal amount of the
Bonds held by each such consenting Holder, upon the effectiveness
of the proposed Amendments. HOLDERS WHO DO NOT CONSENT WILL NOT
RECEIVE ANY PAYMENT IF THE PROPOSED AMENDMENTS ARE APPROVED.
Consents may only be executed by the Holders of record on the
record date of Thursday, May 19, 1994. The expiration date for
the consent is 5:00 p.m. Friday, July 1, 1994.
IF YOU HAVE ALREADY CONSENTED TO THE PROPOSED
AMENDMENTS IDENTIFIED IN THE CONSENT SOLICITATION STATEMENT DATED
JUNE 1, 1994, SHOWBOAT HAS AGREED TO ACCEPT YOUR CONSENT AND WILL
PAY THE CONSIDERATION FOR YOUR CONSENT AS IF YOU HAD CONSENTED TO
THE AMENDMENTS, AS SUPPLEMENTED AND MODIFIED, IN THE ENCLOSED
CONSENT SOLICITATION STATEMENT. However, if you, after reviewing
the enclosed Consent Solicitation Statement desire to withdraw
your consent you must do so by sending a written revocation to
IBJ Schroder Bank and Trust Company, the Trustee for the Bonds
(the "Trustee"), at the address specified on page 4 of the
enclosed Consent Solicitation Statement.
The purpose of the proposed Amendments is to facilitate
Showboat's investment in (i) Sydney Harbour Casino Holdings
Limited ("SHCH") which was selected by the New South Wales Casino
Control Commission to be the preferred applicant to develop,
construct and operate the sole full-service casino in Sydney,
Australia and (ii) other emerging gaming opportunities. The
proposed Amendments, as supplemented and modified, accomplish
these goals by (a) permitting Showboat or its subsidiaries to
invest in Controlled Entities (as defined in the Consent
Solicitation Statement), the equity investment and management
fees (subject to certain approvals) of which will be pledged as
additional Collateral to secure your Bonds; (b) permitting
Showboat or its subsidiaries to raise up to $150 million in
subordinated indebtedness, which will not be secured by any
Collateral and at least $100 million of the proceeds of which
will be used to fund Showboat's investment in SHCH; (c) permit
Showboat to pay its regular quarterly dividend and make certain
Restricted Payments permitted by Section 4.09(b), as amended,
without meeting the debt incurrence requirement contained in the
Indenture; (d) limit Showboat from incurring no more than fifty
percent (50%) of the cost of improvements to either the Las Vegas
Showboat or the Atlantic City Showboat with indebtedness which is
pari passu to the Bonds.
Donaldson, Lufkin & Jenrette Securities Corporation is
assisting us as solicitation agent for this solicitation and can
be reached at (212) 504-3589 (Attention: Kirk B. Wortman) if you
have any questions after reviewing the enclosed materials.
Questions also may be directed to Leann Schneider, the Chief
Financial Officer of Showboat, at (702) 385-9162 or Brad Straub,
the Vice President Finance of Showboat Development Company, at
(609) 487-2018. Holders of the Bonds are requested to return
their consents as soon as possible, but in no event later than
5:00 p.m., New York time, on Friday, July 1, 1994 to the
attention of Reorganization Operations Department, IBJ Schroder
Bank and Trust Company (the "Trustee") as described in the
enclosed Consent Solicitation Statement.
We are all very proud of Showboat. Thank you for your
support.
Sincerely,
/s/ Showboat, Inc.
SHOWBOAT, INC.
Enclosure
SHOWBOAT, INC.
2800 Fremont Street
Las Vegas, Nevada 89104
Solicitation of Consents to
Proposed Amendments to Indenture
_________________
9-1/4% First Mortgage Bonds due 2008
($275,000,000 principal amount outstanding)
Consent Solicitation Statement,
as Amended on June 17, 1994
Showboat, Inc. ("Showboat") is soliciting (the
"Solicitation") the consents (the "Consents") of holders of
record (the "Holders") as of May 19, 1994 (the "Record Date") of
its 9-1/4% First Mortgage Bonds due 2008 (the "Bonds") to certain
proposed amendments (the "Amendments") to the Indenture governing
the Bonds and the Related Documents (the "Indenture"). Showboat
had previously mailed to its Holders a Consent Solicitation
Statement containing certain proposed amendments. The
Solicitation is being made upon the terms and is subject to the
conditions set forth in this Consent Solicitation Statement and
in the accompanying Consent. Only Holders of record of the Bonds
at the close of business on the Record Date will be entitled to
Consent.
Showboat mailed its initial Consent Solicitation Statement
to obtain the Consents of Holders of its Bonds to certain
proposed amendments on June 1, 1994. Since such time Showboat
has approved modifications to the proposed amendments and the
proposed Amendments, as modified, are described herein. SHOWBOAT
WILL ACCEPT ALL PREVIOUSLY SIGNED AND MAILED CONSENTS AND PAY THE
CONSIDERATION SPECIFIED ON PAGE 4 EVEN THOUGH CONSENTS ARE NOT
SIGNED BY SUCH HOLDERS IN CONNECTION WITH THE PROPOSED
AMENDMENTS, AS MODIFIED. HOLDERS MAY REVOKE THEIR CONSENT BY
NOTIFYING IN WRITING THE TRUSTEE FOR THE BONDS AT THE ADDRESS
SPECIFIED ON PAGE 2.
The Amendments, as modified, require the Consent of the
Holders of at least a majority in principal amount of the Bonds.
Holders of the Bonds who wish to Consent must consent to all of
the Amendments as a whole. Showboat's Board of Directors has
approved the Amendments and urges that Holders of the Bonds
consent to their adoption.
THE ACCOMPANYING CONSENT IS SOLICITED BY THE BOARD OF
DIRECTORS. THE DEFINITIVE CONSENT SOLICITATION STATEMENT AND THE
ACCOMPANYING FORM OF CONSENT, AS AMENDED, IS BEING MAILED TO
HOLDERS ON OR ABOUT JUNE 27, 1994. IF YOUR BONDS ARE HELD IN THE
NAME OF A BROKERAGE FIRM, BANK NOMINEE OR OTHER INSTITUTION, ONLY
IT CAN SIGN THE CONSENT WITH RESPECT TO YOUR BONDS. ACCORDINGLY,
PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND GIVE
INSTRUCTIONS FOR A CONSENT TO BE SIGNED REPRESENTING YOUR BONDS.
The securities entitled to consent to the proposed
Amendments are the Bonds. Holders of a majority in principal
amount of the Bonds or Holders of more than $137,500,000 in
principal amount of the Bonds are required to vote in favor of
the proposed Amendments. At the close of business on May 19,
1994, $275,000,000 in principal amount of the Bonds was
outstanding.
Regardless of the outcome of the Solicitation, the Bonds
will continue to be outstanding and will continue to bear
interest as provided in the Indenture.
If the Amendments become effective, they will be binding on
all Holders and their transferees, whether or not such Holders
deliver their Consents. In no event should Holders tender or
deliver their Bonds. All other provisions of the Indenture that
are not amended remain in full force and effect.
Each definitive Consent form should be sent via Federal
Express, or by fax followed up with original by mail, to the
Trustee at the following address:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Reorganization Operations Department
Telephone: (212) 858-2103
Fax: (212) 858-2611
Questions or requests for additional copies of this Consent
Solicitation Statement or the Consent form should be directed to
Showboat's Solicitation Agent, Donaldson, Lufkin & Jenrette
Securities Corporation, 140 Broadway, New York, New York 10005,
telephone number: (212) 504-3589 (Attention: Kirk B. Wortman).
Questions also may be directed to Leann Schneider, Showboat's
Chief Financial Officer, at (702) 385-9162 and Brad Straub, the
Vice President Finance of Showboat Development Company, at
(609) 487-2018.
Showboat has not authorized any person to give any
information or make any representation in connection with the
Solicitation of Consents other than those contained herein and,
if given or made, such information or representations must not be
relied upon as having been authorized. The delivery of this
Consent Solicitation Statement shall not, under any circumstance,
create any implication that the information herein is correct
after the date hereof.
The Solicitation is not being made to, nor will Showboat
accept Consents from, the Holders of the Bonds in any
jurisdiction in which the Solicitation would not be in compliance
with the securities or blue sky laws of such jurisdiction.
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK TIME, ON
FRIDAY, JULY 1, 1994, UNLESS EXTENDED (AS IT MAY BE EXTENDED FROM
TIME TO TIME THE "EXPIRATION DATE"). IF THE REQUISITE CONSENTS
WITH RESPECT TO THE SOLICITATION HAVE NOT BEEN RECEIVED BY 5:00
P.M., NEW YORK TIME, ON THE EXPIRATION DATE, SHOWBOAT MAY EXTEND
THE SOLICITATION FROM TIME TO TIME UNLESS THE REQUISITE CONSENTS
HAVE BEEN RECEIVED. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET
FORTH IN THIS CONSENT SOLICITATION STATEMENT, SHOWBOAT RESERVES
THE RIGHT TO EXTEND, AMEND OR TERMINATE THE SOLICITATION AT ANY
TIME PRIOR TO THE EFFECTIVENESS OF THE PROPOSED AMENDMENTS, OR TO
DELAY ACCEPTING CONSENTS.
Any Holder giving a consent has the power to revoke it
prospectively by giving written notice to the Trustee, by
delivering to the Trustee a duly executed consent bearing a later
date or by notifying the Trustee prior to the Expiration Date.
The Bonds represented by the enclosed consent will be voted if
the consent is properly executed and received by the Trustee
prior to the Expiration Date.
The Solicitation is based upon information provided solely
by Showboat. The Solicitation Agent has not independently
verified and does not make any representation or warranty,
express or implied, or assume any responsibility, as to the
accuracy or adequacy of the information contained herein.
Recipients of this Consent Solicitation Statement are not to
construe the contents of the Consent Solicitation Statement as
legal, business or tax advice. Each recipient should consult his
or her own attorney, business advisor and tax advisor as to
legal, business, tax and related matters concerning this
Solicitation.
<TABLE>
<CAPTION>
The Solicitation
<S> <C>
Votes Required Showboat must receive the unrevoked
Consents of at least a majority in
principal amount of the outstanding
Bonds.
Acceptance of Consents Showboat will accept all properly
completed and executed consents
received and not revoked on or
before 5:00 p.m., New York time, on
the Expiration Date and execute a
Supplemental Indenture upon
acceptance of such Consents. If
the requisite Consents are not
received by the Expiration Date,
Showboat may extend the
Solicitation and continue to accept
Consents. Showboat may, however,
elect at any time to terminate the
Solicitation.
Procedure for Consents Consents, to be effective, must be
properly completed and executed in
accordance with the instructions
contained herein and in the Consent
form. Only Holders of record of
the Bonds on the Record Date are
entitled to Consent (or holders of
a valid proxy from the holder of
record). Holders who wish to
Consent must consent to all of the
Amendments as a whole.
Record Date May 19, 1994.
Consideration for Consents Showboat will pay to Holders who
Consent to the proposed Amendments
a cash fee equal to 2.0% of the
outstanding principal amount of the
Bonds held by each such Consenting
Holder upon the effectiveness of
the proposed Amendments. HOLDERS
WHO DO NOT CONSENT WILL NOT RECEIVE
ANY PAYMENT IF THE PROPOSED
AMENDMENTS ARE APPROVED.
Revocation of Consents Consents may be revoked at any time
prior to the Trustee's receipt of a
certificate and opinion of counsel
from Showboat certifying receipt of
Consents of at least a majority in
principal amount of the outstanding
Bonds (which may be prior to the
Expiration Date). Any Holder
desiring to revoke a Consent must
timely file with the Trustee a
written revocation of such Consent.
Delivery of Consents Executed Consent forms should be
delivered to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Reorganization
Operations Department
Telephone: (212) 858-2103
Fax: (212) 858-2611
Consent forms should not be
delivered directly to Showboat. IN
NO EVENT SHOULD HOLDERS TENDER OR
DELIVER THEIR BONDS.
Information Requests for additional information
and additional copies of this
Consent Solicitation Statement and
the consent form should be directed
to the Solicitation Agent:
Donaldson, Lufkin & Jenrette
Securities Corporation, 140
Broadway, New York, New York 10005,
Attention: Kirk B. Wortman,
telephone number: (212) 504-3589.
</TABLE>
PURPOSE
The purpose of this solicitation is to obtain approval of
the proposed Amendments to the Indenture under which the Bonds
were issued. Since the completion of the Bond Offering, Showboat
Star Partnership commenced operations of its riverboat in New
Orleans, Louisiana. Showboat owns 50% of the partnership
interest in, and manages the riverboat through wholly-owned
subsidiaries. Showboat's investment in the Showboat Star
Partnership was a Restricted Payment under the Indenture.
Additionally, the Company has investigated gaming opportunities
throughout the United States of America and the world. Showboat
has announced and is currently pursuing, among others, the
following opportunities:
(i) It is a member of a consortium which was selected
as the preferred applicant to develop, construct and operate the
sole full service casino in Sydney, New South Wales, Australia.
The consortium is forming a publicly traded Australia
corporation, Sydney Harbour Casino Holdings Ltd. ("SHCH") to be
the parent corporation of the Sydney casino licensee. The casino
is expected to open as a temporary casino in 1995 and a permanent
casino with 1,500 slot machines and 200 table games in 1997.
Showboat will be required to contribute up to approximately A$135
million (Australian dollars) to SHCH for an approximately 27%
interest. Showboat intends to finance its investment in SHCH
with a combination of cash on hand and the proceeds of an equity
or debt offering. Showboat will also receive a management fee
pursuant to a 99-year management contract between the casino
licensee and a Controlled Entity which is 85% owned by Showboat;
(ii) It has entered into a partnership, the Showboat
Marina Partnership, to develop the only gaming vessel and related
dockside improvements in East Chicago, Indiana. Showboat,
through Subsidiaries, will own 55% of the partnership interests
and its partner, Waterfront Development & Entertainment, Inc.,
will own 45% of the partnership interests. The partnership is
the only applicant for the East Chicago gaming berth. Showboat
plans to contribute approximately $30 million to the partnership
and Showboat is obtaining financing in excess of $75 million
(currently anticipated to be approximately $90 million) for the
development, construction and outfitting of the gaming vessel
which will contain up to 60,000 square feet of gaming area and
the related dockside improvements;
Gaming in Indiana, except in Lake County, was
approved in county referendums. In Lake County, the county in
which East Chicago, Hammond and Gary are located, gaming was
approved by city referendums and no vote was required in Gary. A
lawsuit was filed in Porter County, Indiana seeking to declare
the portion of the Riverboat Gambling Act that treated Lake
County differently than other Indiana counties unconstitutional
under Indiana's constitution which prohibits "special"
legislation. On May 19, 1994, the Porter County Superior Court
issued an order declaring such provisions of the Riverboat
Gambling Act unconstitutional and ordered the Indiana Gaming
Commission to cease all activity, except background
investigations, in the process of licensing riverboats until such
time as the legislature cures the constitutional defects in the
legislation or until further order of the Superior Court or the
Indiana Supreme Court. No assurance can be given that the
May 19, 1994 order of the Porter Superior Court shall be
rescinded by such court, overturned by the Indiana Supreme Court,
or cured by the Indiana Legislature; and
(iii) A subsidiary of Showboat, Showboat Mohawk
Investment Limited Partnership has entered into a tribal
management and construction agreement with the St. Regis Mohawk
Tribe for the renovation, expansion, and outfitting of a building
located on the St. Regis Mohawk Reservation in Hogansburg, New
York. In addition, Showboat Mohawk Investment Limited
Partnership will provide working capital for start-up operations
and will lend up to $35 million to the St. Regis Mohawk Tribe for
renovating, expanding and outfitting of a building containing,
after expansion, up to an approximately 30,000 square foot casino
with approximately 130 table games. In addition, a portion of
the loan will be used for working capital and for start-up
operation purposes. The Agreement contemplates the payment of a
management fee to Showboat Mohawk Investment Limited Partnership
of 20% of earnings before taxes, interest, depreciation and
amortization for a term of five years. The management fee so
calculated cannot exceed 30% of net gaming revenues. The tribal
management agreement and related documents must be approved by
the National Indian Gaming Commission ("NIGC"). Additionally, a
newly elected St. Regis Mohawk Tribal Chief has requested the
NIGC to delay taking any action on the agreements until July
1994. Approval of certain environmental matters is also
required. The Governor of New York and the St. Regis Mohawk
Tribe entered into a state gaming compact on October 15, 1993.
No assurance can be given that any of the foregoing listed
gaming opportunities or others will be realized.
The existing Indenture significantly limits Showboat's
ability to enter into partnerships, consortiums or other
corporations on a less than wholly-owned basis. Showboat has
agreements with third parties to develop the announced casinos
which management believes will enhance its competitive position
in the gaming industry and increase and diversify Showboat's
operating cash flow. Additionally, Showboat believes that the
likelihood of realizing gaming opportunities increases if
Showboat has aligned itself with local investors. However, due
to limitations in the Indenture, unless the proposed Amendments
are approved, Showboat's ability to include local investors is
limited since investments in non-wholly owned Subsidiaries are
not Permitted Investments and constitute Restricted Payments.
Moreover, unless the proposed Amendments are approved, Showboat's
ability to expand its operations beyond the Sydney Casino will be
substantially reduced since the current Indenture limits
Showboat's ability to invest in non-wholly owned subsidiaries.
BACKGROUND AND PURPOSE OF THE PROPOSED AMENDMENTS
Description of Proposed Amendments
Showboat seeks the Holders' consent to Proposed Amendments,
as modified, each of which is described below. The text of the
proposed Amendments are contained in Exhibit A.
(a) Permit Investment in Non-Wholly Owned Subsidiaries
and SHCH Which are Controlled or Managed by Showboat. Adding
provisions permitting Showboat to invest in Controlled Entities
which are engaged in gaming activities will provide greater
investment flexibility to Showboat. Showboat has evaluated a
number of gaming projects in emerging gaming markets. Most of
these opportunities are in the form of joint ventures with local
business people. These joint ventures provide a means to expand
into new gaming jurisdictions. The local business people provide
an understanding of the local market and provide a relationship
with the community in which the gaming facility is to be built.
Showboat provides the casino management skills necessary to gain
state licensing and expertise to operate the gaming facility.
The ownership's structure of these joint ventures is such that
Showboat would own at least 50% of the venture and would control
the daily operation of the project.
Section 4.09 currently limits Showboat from investing
in non-wholly owned subsidiaries except by making Restricted
Payments or by making Investments in Non-Recourse Subsidiaries.
Holders are requested to amend Section 4.09 to permit investments
in Controlled Entities. A Controlled Entity will be any of (a)
SHCH, (b) any Non-Recourse Subsidiary of Showboat, including
Showboat Star Partnership and Showboat Marina Partnership,
provided that Showboat or a Subsidiary of Showboat owns at least
50% of the outstanding Capital Stock of such Non-Recourse
Subsidiary and which is designated by the Company as a Controlled
Entity or (c) any Qualified Native American Gaming Project,
including the Qualified Native American Gaming Project to be
managed by Showboat Mohawk Investment Limited Partnership,
provided that in each case: (i) each Subsidiary of Showboat that
owns, directly or indirectly, any Capital Stock of the Controlled
Entity shall become a Guarantor of the Bonds; (ii) the Capital
Stock of such Guarantor or Controlled Entity is pledged to the
Trustee as Collateral to secure the Bonds; (iii) any other
Investment in the Controlled Entity is pledged to secure the
Bonds; (iv) the Controlled Entity is managed by Showboat or a
wholly-owned Subsidiary of Showboat, and subject to any required
consent from any regulatory agency or body, the revenues from any
management or similar contract from such Controlled Entity
received by any Subsidiary of Showboat is assigned to the Trustee
to secure the Bonds or a Guarantee thereof; and (v) no such
pledge shall require the Trustee or any Bondholder to become
licensed, qualified or found suitable under any gaming law prior
to the realization or foreclosure of such pledge. Moreover,
Showboat will only be permitted to make an investment in a
Controlled Entity only if, from the effective date of the
Proposed Amendments, as modified, to December 31, 1996 the
Company's Fixed Charge Coverage Ratio for the Company's most
recently ended 12 months is greater than 1.50 to 1 and for the
period commencing after December 31, 1996 the Company's Fixed
Charge Coverage Ratio for the Company's most recently ended 12
months is greater than 1.75 to 1.
All Indebtedness of the Controlled Entity will be
nonrecourse to Showboat, the Las Vegas Showboat Hotel, Casino and
Bowling Center and the Atlantic City Showboat Casino Hotel.
Showboat shall be prohibited from contributing any of the assets
of the Las Vegas Showboat Hotel, Casino and Bowling Center or the
Atlantic City Showboat to a Controlled Entity. If at any time a
Controlled Entity ceases to be a Controlled Entity, it will
become a Restricted Payment on that date unless Showboat's
investment in the Controlled Entity is purchased at the greater
of its original investment or book value at the date the
Controlled Entity ceases to be a Controlled Entity.
For purposes of Section 4.09, the Company would like its 27%
held subsidiary Sydney Harbour Casino Holdings Limited designated
a Controlled Entity. The Sydney Harbour Casino project as
currently planned would require Showboat to invest up to
approximately A$135,000,000, for an approximate 27% interest in
the Sydney Harbour Casino. Due to foreign currency fluctuations,
the proposed Amendment will provide that Showboat may invest up
to $110 million in SHCH and such investment shall not be a
Restricted Payment. Amounts invested in excess of $110 million
in SHCH shall be a Restricted Payment. The management fee is
expected to be based on both the total revenue and the gross
operating profit of the Sydney Harbour Casino.
The following table gives comparative statistics on
Australian casinos.
<TABLE>
<CAPTION>
Casino
Revenue
Year Number of Number of $M (Aus)
Casino Opened Tables Machines 1991/1992
------ ------ ------ -------- ---------
<S> <C> <C> <C> <C>
Hobart 1973 40 272 29
Darwin 1979 35 386 25
Alice Springs 1982 21 196 8
Launceston 1982 25 188 19
Gold Coast 1985 112 998 167
Perth 1985 115 1,128 201
Adelaide 1985 93 750 89
Townsville 1986 34 182 20
Canberra* 1992 47 -- N/A
Brisbane 1995 100 1,200 N/A
Cairns 1995 45 540 N/A
Sydney** 1995 150 500 N/A
Melbourne*** 1996 200 2,500 N/A
Sydney*** 1997 200 1,500 N/A
_______________
<FN>
*Currently operating at a temporary location with 37 tables.
**Temporary Casino.
***Permanent Casino.
Source: Australian Casino Regulatory Organizations
</TABLE>
Based on the maximum allowable number of gambling tables,
the permanent Sydney Harbour Casino will rank as one of the
largest casinos in the world. The temporary Sydney Harbour
Casino will also be the largest in Australia (based upon the
maximum number of tables permitted) until the new Melbourne
Casino opens in 1996. The permanent Sydney Harbour Casino has
the same number of permitted gaming tables as the Melbourne
Casino, although fewer machines.
Additionally, Showboat has agreed that the Amendments shall
not become effective, among others, unless Showboat delivers to
the Trustee a collateral assignment of the distributions and
income from the Showboat Star Casino. Currently, Holders of the
Bonds do not have a security interest in Showboat's distributions
and income from the Showboat Star Casino.
(b) Permit the incurrence of up to $150 million of
subordinated debt. In combination with an equity offering the
Company would like to raise $150 million of subordinated debt to
fund its rapid diversification and expansion. The debt financing
would be unsecured and expressly subordinated in right of payment
to the Bonds with a maturity date after the maturity date of the
Bonds. Holders are requested to amend Section 4.08 to permit the
incurrence of up to $150 million in debt with at least $100
million designated for the investment in SHCH.
(c) Permit Showboat to pay its Regular Quarterly
Dividend and make certain Restricted Payments currently permitted
by Section 4.09(b). A Regular Quarterly Dividend is a quarterly
dividend regularly and normally declared and paid by Showboat in
accordance with its prior business practices in an amount not to
exceed $0.10 per fiscal year (or the equivalent thereof after
giving effect to any stock splits, stock dividends or
recapitalizations of the common stock after June 17, 1994. The
additional debt permitted to be incurred as a result of this
Consent Solicitation will limit Showboat's ability, among others,
to pay its Regular Quarterly Dividend, make Permitted Investments
in Controlled Entities and make Restricted Investments in Non-
Recourse Subsidiaries. The Company will have significant
resources to pay its Regular Quarterly Dividend and make
Restricted Investments of up to $75 million in Non-Recourse
Subsidiaries (as currently permitted), however, the Company will
not be able to meet the requirement to be able to incur $1.00 of
additional indebtedness under the Fixed Coverage Ratio test.
Holders are requested to amend Section 4.09(b) to permit the
Company to pay its Regular Quarterly Dividend, make certain
Restricted Payments (as currently permitted in Section 4.09(b))
and pursuant to the requested new clauses (ix) and (x) to Section
4.09(b) regarding Controlled Entities and the Company's
investment in SHCH, Showboat Marina Partnership, Showboat Star
Partnership, and Showboat Mohawk Investment Limited Partnership.
(d) Reduce the amount of pari passu indebtedness
permitted for Project Expansions. For any expansion at the
Atlantic City Showboat or the Las Vegas Showboat, Showboat and
its Subsidiaries will not incur more than 50% of the Project Cost
as pari passu debt. Holders are requested to amend Section
4.07(e)(ii) to restrict Showboat from providing more then 50% of
any Project Cost of any Project Expansion at Atlantic City
Showboat or the Las Vegas Showboat as debt which is pari passu to
the Bonds.
CERTAIN CONSIDERATIONS
Each Holder should carefully consider the following factors,
among others, in evaluating the Amendments.
Fraudulent Conveyance Considerations. One of the proposed
Amendments will require from time to time the issuance of
Subsidiary Guaranties from a Subsidiary of Showboat. Under
applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if any of Showboat
or the Guarantors (a)(i) is engaged in a business or transaction
for which the assets of Showboat or the Guarantors constituted
unreasonably small capital or (ii) intends to incur, or believes
that it would incur, debts beyond its ability to pay such debts
as they mature or (iii) was a defendant in an action for money
damages, or had a judgment for money damages docketed against it
(if, in either case, after final judgment the judgment is
unsatisfied), and (b) any of Showboat or the Guarantors as the
case may be, at the time of the issuance of the Guaranties
receives less than reasonably equivalent value or fair
consideration, the Bonds (including the Guaranties), and any
pledge or other security interest securing such indebtedness
could be voided, or claims in respect of the Bonds (including the
Guaranties) or such indebtedness could be subordinated to all
other debts of the Company or the Guarantors. The voiding of any
of such pledges or other security interests or any such
indebtedness could result in an event of default with respect to
such indebtedness, which could result in acceleration thereof
and, through cross default provisions, other indebtedness. In
addition, the payment of interest and principal by the Company
pursuant to the Bonds or the payment of amounts by Guarantors
pursuant to the Guaranties could be voided and be required to be
returned to the Company or any Guarantor, or to a fund for the
benefit of the creditors of the Company or any Guarantor or to
any judgment creditor referred to in clause (iv) above.
Ability, to Realize on Collateral. The Trustee's ability to
foreclose upon the Collateral will be limited by the relevant
gaming laws, which require that persons who own or operate a
casino hotel hold a casino license. Showboat currently operates
a gaming business in New Jersey, Nevada, and Louisiana, and is
applying for gaming license in Australia and Indiana. Generally,
no person can hold a gaming license unless the person is found
qualified or suitable by each jurisdictions gaming authority (the
"Gaming Authority"), respectively. In order for the Trustee to
be found qualified or suitable the Gaming Authority would have
discretionary authority to require the Trustee and any or all of
the holders of the Bonds to file applications, be investigated
and be found qualified or suitable as a landlord or landlords of
gaming establishments. The applicant for qualification, a
finding of suitability or licensing must pay all costs of such
investigation. If the Trustee is unable or chooses not to
qualify, be found suitable, or licensed to own or operate such
assets, it would either have to sell such assets or retain an
entity licensed to operate such assets. In addition, in any
foreclosure sale or subsequent resale by the Trustee, licensing
requirements under the relevant gaming laws may limit the number
of potential bidders and may delay any sale, either of which
events could have an adverse effect on the sale price of such
collateral.
CONSENT SOLICITATION
General Terms of Solicitation
In order to effect the proposed Amendments, Holders of more
than 50% of the aggregate outstanding principal amount of the
Bonds must consent to such Amendments. Attached hereto as
EXHIBIT A is the form of Consent to be executed and delivered by
each of the Holders. There are presently issued and outstanding
$275,000,000 aggregate principal amount of Bonds. Accordingly,
the Amendments must be approved by the holders of more than
$137,500,000 aggregate principal amount of Bonds. Holders of the
Bonds who wish to Consent to the proposed Amendments must consent
to all of the proposed Amendments as a whole. If you have
previously consented to Amendments identified in the Consent
Solicitation Statement dated June 1, 1994, Showboat will accept
the previously provided Consent and pay the consideration
specified below to such consenting Holding. However Holders of
more than $137,500,000 aggregates principal amount of the Bonds
must consent to the Amendments, as modified and desire to consent
to the Amendments, as modified, the Company shall deem the
previously delivered Consent as the Consent to the Amendments, as
modified.
This Consent Solicitation is being sent to all parties who
are Holders of record of the Bonds at the close of business on
the Record Date.
If the requisite Consents are received on or prior to the
Expiration Date, and all other conditions to the Amendments have
been satisfied or waived, then a Supplemental Indenture will be
executed amending the Indenture, together with such other
amendment agreements as may be necessary to amend the Related
Documents.
Procedure for Consenting
A Consent can only be effected by execution of the enclosed
form of Consent attached as EXHIBIT A, properly completed,
executed and delivered by each of the Holders to the Trustee at
the address set forth on page 2 of this Consent Solicitation.
Upon receipt by the Solicitation Agent of a Consent completed and
executed by a Holder, the Holder will be deemed to have consented
to or disapproved of the Amendments as delineated in the Consent.
Only registered Holders of the Bonds as of the record date
set forth above may deliver a Consent (or holders of a valid
proxy from the holder of record). Any beneficial owner of Bonds
who is not the registered Holder of such Bonds must arrange with
the registered holder to execute and deliver the Consent on his,
her or its behalf (or holders of a valid proxy from the holder of
record).
All questions as to the validity, form, eligibility, receipt
and acceptance of any Consent will be resolved by Showboat, whose
determination shall be final and binding. Showboat reserves the
right to waive any defects or irregularities or conditions of
delivery as to particular Consents. Showboat's interpretation of
the terms and conditions of the Consent Solicitation Statement
shall be conclusive and binding.
All inquiries or correspondence with respect to or any
request for additional information or copies of this Consent
Solicitation should be directed to the Solicitation Agent,
Attention: Kirk B. Wortman, at its address and telephone number
set forth on page 5 of this Consent Solicitation Statement.
Consideration for Consenting
Showboat will pay to Holders who Consent to the proposed
Amendments a cash fee equal to 2.0% of the outstanding principal
amount of the Bonds held by each such Consenting Holder upon the
effectiveness of the proposed Amendments. HOLDERS WHO DO NOT
CONSENT WILL NOT RECEIVE ANY PAYMENT IF THE PROPOSED AMENDMENTS
ARE APPROVED.
Expiration Date; Extensions
The term "Expiration Date" means 5:00 p.m. New York time
July 1, 1994, unless Showboat, in its sole discretion, extends
the period during which the Consent Solicitation is open. In
such event, the term "Expiration Date" shall mean the time and
date on which such Consent Solicitation, as so extended by
Showboat, shall expire. Showboat reserves the right to extend
the Consent Solicitation at any time and from time to time by
making a public announcement of any such extension of the
Expiration Date or by sending notice of such extension to such
record holders.
Revocation of Consents
Consents with respect to the Amendments will become
irrevocable when the Trustee receives an officer's certificate
and opinion of counsel from Showboat certifying that the Holders
of the requisite principal amount of Bonds have consented to the
Amendments. Consents may be revoked at any time prior to the
Expiration Date by delivery to the Trustee a written notice of
revocation signed and dated by the registered Holder of the
Bonds, accompanied by information sufficient to enable the
Trustee to identify the Bonds covered by the Consent so revoked
and to determine the rights of such Holders to revoke such
Consent.
Voting Procedures
A majority of Holders of the principal outstanding amount of
the Bonds, or Holders of $137,500,000, must approve the proposed
Amendments at the meeting. Abstentions or failure to consent are
treated as votes "Against" the proposed Amendments.
The Trustee will tabulate the number of "For" votes,
"Against" votes, and "Abstain" votes for the proposed Amendments.
Ownership of Management and Certain Other Beneficial Owners
As of May 19, 1994, other than J.K. Houssels and John D.
Gaughan, no director of Showboat owns any of the Bonds. J.K.
Houssels owns $450,000 and John D. Gaughan owns $3,640,000 (or
1.3% of the outstanding Bonds) in principal amount of the Bonds.
All directors and officers, as a group hold $4,100,000 in
principal amount of the Bonds or 1.5%, collectively, of the
outstanding Bonds. Mr. Houssels and Mr. Gaughan's address is
2800 Fremont Street, Las Vegas, Nevada, 89104. Showboat is not
aware of the extent of the holdings of any other beneficial
holder of the Bonds. However, the following table discloses the
names and addresses, the amount of the Bonds held, and percentage
held by certain institutions.
<TABLE>
<CAPTION>
Principal % of
Amount of Outstanding
Name and Address Bonds Held Bonds
- ------------------------- ---------- --------
<C> <S> <C>
Bank of New York
925 Patterson Plank Road
Secaucus, NJ 07094 $16,020,000 5.8
Bankers Trust
Corporate Securities Service
16 Wall Street - Level D
New York, NY 10005 $30,100,000 10.9
Boston Safe Deposit
& Trust Co.
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717 $18,250,000 6.6
Northern Trust Co.-Trust
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717 $51,550,000 18.7
SSB-Custodian
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717 $49,180,000 17.9
</TABLE>
1995 Annual Meeting of Shareholders
According to the Company's Restated Bylaws, the next annual
meeting of shareholders is expected to be held on or about
April 25, 1995. Security holders desiring to present proper
proposals at that meeting and to have their proposals included in
the Company's proxy statement and form of proxy for that meeting
must submit the proposal to the Company, and it must be received
by the Company at its executive offices at 2800 Fremont Street,
Las Vegas, Nevada 89104 no later than December 17, 1994. The
proposal must comply with Securities and Exchange Commission
Regulation 14a-8.
Expenses of Solicitation
Showboat will bear the expense of preparing, printing and
mailing this Consent Solicitation and the accompanying form of
Consent, including legal, accounting and other expenses. In
addition to solicitation by use of the mails, Consents may be
solicited by directors, officers, employees and agents of
Showboat in person or by telephone, telegram or other means of
communication. Such directors, officers, employees and agents
will not be additionally compensated but may be reimbursed for
out-of-pocket expenses in connection with the Solicitation.
Arrangements may also be made with brokerage houses, custodians,
nominees and fiduciaries for forwarding this Consent Solicitation
to the beneficial owners of the Bonds held of record by such
party and Showboat may reimburse such brokerage house,
custodians, nominees and fiduciaries for reasonable expenses
incurred in connection therewith.
In addition, Showboat has retained the Solicitation Agent
for solicitation and advisory services in connection with this
Consent Solicitation Statement. For such services, the
Solicitation Agent will receive a fee of $150,000. The
Solicitation Agent will also be reimbursed for certain out-of-
pocket expenses and will be indemnified against certain
liabilities, including liabilities under federal securities laws,
in either case incurred in connection with the Solicitation. The
Solicitation Agent will solicit consents for individuals,
brokers, bank nominees and other institutional holders of the
Bonds.
Available Information
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 statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at
the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at the New York Regional Office of the Commission,
7 World Trade Center, 13th Floor, New York, New York 10048; and
at the Chicago Regional Office of the Commission, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material
can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Company's Common Stock, $1.00 par value,
is listed on the New York Stock Exchange. Reports, proxy
statements, and other information concerning the Company may be
inspected at the offices of the New York Stock Exchange at
20 Broad Street, New York, New York 10005.
A copy of the Indenture is available without charge, upon
written or oral requests by any person to whom this Consent
Solicitation Statement has been delivered, from H. Gregory Nasky,
Secretary, Showboat, Inc., 2800 Fremont Street, Las Vegas, Nevada
89104 (telephone (702) 385-9141).
EXHIBIT A
---------
SHOWBOAT, INC.
CONSENT FORM
TO: Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: Reorganization Operations Department
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Telephone: (212) 858-2103
Fax: (212) 858-2611
RE: Consent Solicitation dated May 20, 1994, as amended on
June 17, 1994, for Proposed Amendments to Indenture
dated as of May 18, 1993
The undersigned hereby certifies to Showboat, Inc., a Nevada
corporation ("Showboat"), that as of May 19, 1994, the
undersigned was the Holder of record of $__________ aggregate
principal amount of the Showboat's 9-1/4% First Mortgage Bonds
due 2008 (or was a beneficial owner of such Bonds on such date
and was a participant with the Depositary Trust Company through
which such Bonds were owned of record). The undersigned Holder
further certifies that it is authorized to execute and deliver
this Consent Form for and on its behalf and/or for and on behalf
of any beneficial owner of the above-described Bonds.
The undersigned Holder acknowledges that each of the terms
not otherwise defined herein shall have the meanings assigned
thereto in the Consent Solicitation to which this Consent Form
was attached.
The following sets forth the Amendments to the Indenture
proposed by Showboat. The Amendments to the Indenture shall be
in substantially the form set forth below with such non-material
alterations as Showboat in its discretion deems necessary or
desirable or such other changes as Showboat and the Trustee
determine necessary and proper in light of or to effect the
substance and purpose of the proposed Amendments.
THE PROPOSED AMENDMENTS
Add the following definitions to Section 1.01:
Section 1.01 of the Indenture shall be amended to insert the
following:
"Australian Gaming Approval" means the official
selection of SHCH (or a Subsidiary of SHCH) as the sole
licensee or operator of a casino gaming operation in
Sydney, Australia.
"Controlled Entity" means:
any of (a) SHCH, (b) any Non-Recourse Subsidiary of the
Issuer, including Showboat Star Partnership and
Showboat Marina Partnership, provided that the Issuer
or a Subsidiary of the Issuer owns at least 50% of the
outstanding Capital Stock of such Non-Recourse
Subsidiary, and which is designated by the Issuer as a
Controlled Entity or (c) any Qualified Native American
Gaming Project, including the Qualified Native American
Project to be managed by Showboat Mohawk Investment
Limited Partnership, provided that in each case:
(i) each Subsidiary of the Issuer that owns,
directly or indirectly (through one or
more Subsidiaries), any Capital Stock of
such Controlled Entity shall become a
Guarantor of the Bonds by execution of a
Subsidiary Guaranty;
(ii) the Capital Stock of each such Guarantor
or such Controlled Entity owned by the
Issuer or by any Subsidiary shall be
pledged to the Trustee as Collateral to
secure the Bonds or the guaranty of such
Guarantor pursuant to a Guarantor Pledge
Agreement, which, in the case of Capital
Stock in the form of a partnership
interest, may be in the form of a
collateral assignment of the
distributions or income from the
partnership;
(iii) each Subsidiary that owns any other
Investment (including any loan or
advance) in or to such Controlled Entity
shall pledge, hypothecate, or
collaterally assign such Investment to
the Trustee as Collateral to secure the
Bonds or a Guarantee of the Bonds;
(iv) such Controlled Entity is a Managed
Entity or a Subsidiary of such
Controlled Entity which is engaged in
gaming activities is a Managed Entity,
and, to the extent not restricted by any
Gaming Authority, the revenues from any
management contract to manage such
Controlled Entity or revenues from any
administrative, development, support or
similar fee generating agreement from
such Controlled Entity received by any
Subsidiary of the Issuer shall be
pledged, hypothecated or collaterally
assigned to the Trustee to secure the
Bonds or a Guarantee thereof; and
(v) no such pledge, hypothecation or
collateral assignment (prior to the
realization or foreclosure thereon)
shall require the Trustee or any
Bondholder to become licensed, qualified
or found suitable under any gaming law
or regulation (solely due to such
pledge, hypothecation or collateral
assignment) unless the Trustee or such
Bondholder consents to such procedure.
"Managed Entity" means either (i) any Person that is not
under Third-Party Management, so long as such Person is not
under Third-Party Management or (ii) a Person that the
Issuer or any Subsidiary has a contract with to manage the
day-to-day gaming operations and affairs, so long as such
contract remains in effect.
"Management Contract Approval" means, with respect to the
Sydney Harbour Casino, a binding agreement with SHCH that
provides that the Issuer or a Person at least 80% of whose
equity interests are owned by the Issuer or a wholly-owned
Subsidiary (other than a Non-Recourse Subsidiary) will
manage the gaming operations of the Sydney Harbour Casino
for a period of not less than 12 years.
"Regular Quarterly Dividend" means the quarterly dividend
determined by the Board of Directors of the Issuer in its
reasonable judgment to be its regular and normal quarterly
dividend and paid by the Issuer in accordance with the
Issuer's prior business practices in an amount per share not
to exceed $0.10 per fiscal year (or the equivalent thereof
after giving effect to any stock splits, stock dividends or
recapitalizations of the common stock after June 17, 1994).
"Qualified Native American Gaming Project" means any Gaming
Related Business in the United States owned by a tribe or
band of Native Americans in which the Issuer or a Subsidiary
holds a management contract to manage or operate the day-to-
day casino or gaming operations.
"SHCH" means Sydney Harbour Casino Holdings Limited, a New
South Wales corporation.
"Sydney Harbour Casino" means all of SHCH's interest in its
proposed casino and related properties located in Sydney,
Australia.
"Third-Party Management" with respect to any Person means
that the day-to-day affairs or business operations of such
Person are managed by a third party that is not the Issuer
or any of its Subsidiaries.
Replace Section 4.07(e)(ii) in its entirety as follows:
"(ii) the aggregate principal amount of such
Indebtedness does not exceed 50% of the aggregate
Project Costs of such Project Expansion; and"
Add the following to Section 4.08 ("Limitation on
Indebtedness") by inserting the following clause in the second
paragraph thereof immediately after clause (ix) thereof and
before the "." and deleting the word "and" preceding such clause:
"and (x) the incurrence by the Issuer of up to $150
million in aggregate principal amount of Indebtedness
outstanding at any one time under this clause (x) and
the guarantee by any Guarantor of such Indebtedness;
provided, that (1) the net proceeds up to $100 million
must be kept in a segregated account in the United
States invested in Cash Equivalents pledged as
Collateral to secure the Bonds until the receipt of the
Australian Gaming Approval and Management Contract
Approval, or if such Australian Gaming Approval and
Management Contract Approval is not obtained within one
year of such incurrence, such segregated net proceeds
shall be used to redeem or prepay such Indebtedness or
to fund an offer to all Holders to repurchase the Bonds
at a purchase price of 100% of the principal amount
thereof, together with accrued and unpaid interest, or,
if such net proceeds remain after such offer, such net
proceeds may be used for general corporate purposes and
(2) such Indebtedness must not be secured, such Indebtedness
and any guaranty thereof must be expressly subordinated
in right of payment to the Bonds and/or a Subsidiary
Guaranty of the Bonds and no installment of principal
on such Indebtedness shall have a sinking fund payment,
scheduled maturity or final maturity prior to May 15, 2008."
Section 4.09(a)(2) shall be amended to add the following
introductory phrase to such subparagraph: "With respect to a
Restricted Payment other than a Regular Quarterly Dividend or a
Restricted Investment in a Subsidiary engaged in a Gaming Related
Business," Section 4.09(a)(3) shall be amended by replacing the
first parenthetical therein with "(including Restricted Payments
permitted by clauses (i) and (ii) of Section 4.09(b) but
excluding any Restricted Payments permitted by clauses (iii)-(x)
of Section 4.09(b))." The provision at the end of Section
4.09(b) shall be amended by deleting the words "clauses (iii)-
(viii)" and replacing them with the words "clauses (iii)-(x)" and
by deleting the phrase beginning with "and (y)" to the end of the
sentence.
Section 4.09(b)(vii) is hereby amended to read as follows:
"dividends or distributions from a Non-Recourse Subsidiary and
dividends or distributions from a Controlled Entity to a Non-
Recourse Subsidiary."
Add the following to Section 4.09 ("Limitation on Restricted
Payments") by inserting the following clause in paragraph (b)
immediately after clause (viii) thereof and deleting the word
"and" preceding such clause:
"(ix) Investments by the Issuer or any Guarantor in
Controlled Entities, so long as such Persons remain
Controlled Entities provided that (A) any Investment in
SHCH exceeding $110 million shall be a Restricted
Payment pursuant to the preceding paragraph, (B) any
Investment in Showboat Marina Partnership exceeding $30
million shall be a Restricted Payment pursuant to the
preceding paragraph, (C) any Investment in Showboat
Mohawk Investment Limited Partnership exceeding $30
million shall be a Restricted Payment pursuant to the
preceding paragraph, (D) neither the Issuer nor any
Guarantor shall invest any portion of the Las Vegas
Showboat or the Atlantic City Showboat in, or
contribute any such assets to, a Controlled Entity, and
(E) the Issuer would have, at the time of such
Investment and after giving effect thereto as if such
Investment had been made at the beginning of the
applicable four-quarter period, a Fixed Charge Coverage
Ratio of at least 1.5 to 1 if such Investment is made
prior to December 31, 1996 and at least 1.75 to 1 if
such Investment is made thereafter; and
(x) the retirement of any Indebtedness incurred to
finance or refinance the Restricted Investment used to
develop, construct or open the Sydney Harbour Casino in
the event that Australian Gaming Approval is not
obtained or Management Contract Approval is not
obtained in accordance with the provisions of Section
4.08(b)(x)."
Add new Section 4.09(e) that shall read as follows:
"(e) If any Controlled Entity ceases to be a
Controlled Entity, then all Investments owned by the
Issuer or any Subsidiary (other than a Non-Recourse
Subsidiary) in such Controlled Entity shall be deemed
to be a Restricted Investment made on such date, unless
such former Controlled Entity purchases or redeems all
such Investments for a price at least equal to the
greater of the book value of such Investments on the
date such entity ceases to be a Controlled Entity or
the original amount of such Investments."
Section 4.14 shall be amended to read in its entirety:
"If the Issuer or any of its Subsidiaries shall
transfer or cause to be transferred, in one or a series
of related transactions, any Collateral having a book
value in excess of $5 million to any Subsidiary (other
than a Non-Recourse Subsidiary or a Controlled Entity)
that is not a Guarantor, then such transferee or
acquired Subsidiary shall execute a Subsidiary Guaranty
and deliver an opinion of counsel, in accordance with
the terms of this Indenture."
With respect to the principal amount of the Bonds indicated
on the first page of this Consent, the undersigned hereby
consents to the foregoing Amendments.
Showboat, Inc. and the undersigned agree that the Amendments
shall become effective upon (i) the receipt of the requisite
consents from the Holders of a majority in principal amount of
the Bonds, (ii) the execution of a supplemental indenture
evidencing the Amendments, and (iii) the delivery to the Trustee
of guarantee and pledge or security agreements evidencing that
Showboat Star Casino has become a Controlled Entity pursuant to
the definition thereof in the Amendments.
This Consent Form has been executed by the undersigned
Holder as of the ____ day of _________________, 1994.
______________________________
By:______________________________
Its:______________________________
