<PAGE>
Preliminary Copy
May 19, 1994
To Holders of:
9-1/4% First Mortgage Bonds due 2008
of Showboat, Inc.
Ladies and Gentlemen:
Showboat, Inc. ("Showboat"), is hereby soliciting the
consent of the holders (the "Holders") of the 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"). Terms not otherwise defined herein
have the meanings assigned to them in the Indenture or the
proposed Amendments. 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.
Showboat will invest approximately $135 million (or US$100
million at current exchange rate) in, and will own approximately
27% of, SHCH. In addition, an 85% owned subsidiary of Showboat
will manage, for a fee, the operations of the Sydney Harbour
Casino pursuant to a 12-year management contract.
The proposed Amendments accomplish this goal by
(i) permitting Showboat or its subsidiaries to invest in
Controlled Entities (as defined herein), the equity investments
and management fees (subject to certain approvals) of which will
be pledged as additional Collateral to secure your Bonds;
(ii) 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; and
(iii) permit Showboat to pay its regular quarterly dividend and
make certain
<PAGE>
Restricted Payments permitted by Section 4.09(b), as amended,
without meeting the Debt Incurrence requirement.
The proposed Amendments will provide additional
Collateral to secure your Bonds and will not affect the existing
Collateral consisting of a first priority mortgage on the Las
Vegas Showboat and the Atlantic City Showboat.
As compensation for the foregoing approvals and
actions, Showboat will pay to Holders who Consent to the proposed
Amendments, a cash fee equal to .50% of the outstanding principal
amount of 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, JUNE 10,
1994.
Management believes that the proposed Amendments would
allow Showboat to raise the appropriate amount of debt and equity
capital and provide greater flexibility to it in responding to
opportunities in emerging gaming markets. Many of the
opportunities evaluated by Showboat involve the participation by
local investors. The current provisions in the Indenture place
limitations on Showboat's ability to participate in such
opportunities with local investors since the existing covenants
treat investments in non-wholly owned subsidiaries as Restricted
Payments. The proposed Amendments would permit Showboat to take
advantage of such opportunities since it would allow certain
Investments in Controlled Entities. Showboat will own at least
50% of all Controlled Entities (and 27% of SHCH which is
specifically included as a Controlled Entity) and Showboat's
investment in the Controlled Entities would be a Permitted
Investment. All investments in Controlled Entities will be
pledged as additional collateral for the Bonds.
Showboat is a member of a consortium which was selected
on May 6, 1994 as the preferred applicant to develop, construct
and operate the sole full service casino in Sydney, New South
Wales, Australia (the "Sydney Casino"). The investment in SHCH,
the corporation formed by the consortium, will be a substantial
opportunity for Showboat in a new gaming venue. The casino
license will be issued by the New South Wales Casino Control
Authority following exclusive negotiations with the preferred
applicant in
<PAGE>
order to complete all required legal documentation
and the granting of building and development approvals which are
required for the issuance of the casino license. SHCH
anticipates that the exclusive negotiation period will take
approximately 5 months.
Showboat is a leader in the rapidly expanding emerging
gaming industry. A key component of Showboat's strategy is to
diversify its sources of operating cash flow. The Company
expects to utilize the expertise and resources of third parties
to develop and obtain gaming opportunities in emerging gaming
markets. Management believes the involvement of third parties is
crucial to the continuing success of its development of gaming
opportunities.
Showboat would like to modify the Indenture for these
changes as soon as possible to take advantage of emerging gaming
opportunities.
Since the completion of the Bond offering in May 1993,
the Company has opened the Star Casino in New Orleans, Louisiana
with its partner, Star Casino, Inc. Showboat, through its
wholly-owned subsidiary, owns 50% of the Star Casino, which until
February 10, 1994 was the only riverboat casino operating in New
Orleans, Louisiana. Lake Pontchartrain Showboat, Inc., another
wholly owned Subsidiary, manages the Star Casino for a management
fee equal to 5% of all casino revenues, net of gaming taxes and
boarding fees.
Based on results for the twelve months ended March 31,
1994, Showboat's consolidated ratio of EBITDA/consolidated
interest expense was 2.8 to 1.0. The consolidated EBITDA
includes $1.3 million of pre-opening expenses relating to the
opening of the Star Casino and $5.6 million of expenses relating
to Showboat's Development Division. Showboat's consolidated
ratio of debt/EBITDA was 3.8 to 1.0 for the twelve months ended
March 31, 1994.
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
your consents as soon as possible, but in no event later than
5:00 p.m., New York time, on Friday, June 10, 1994 to the
attention of Barbara
<PAGE>
McCluskey, IBJ Schroder Bank and Trust Company (the
"Trustee ) as described in the enclosed Consent
Solicitation Statement.
The enclosed Preliminary Consent Solicitation Statement
is subject to completion or amendment and has been filed with the
Securities and Exchange Commission. No consents are being
distributed nor may any consents be accepted by Showboat prior to
the filing of the definitive Consent Solicitation Statement with
the Securities and Exchange Commission. A definitive copy is
expected to be filed on June 1, 1994.
We are all very proud of Showboat. Our expansion
efforts have been the result of many hours of hard work and
planning and your financial support for our efforts is
appreciated. Thank you for your continued support.
Sincerely,
SHOWBOAT, INC.
J.K. Houssels
President and Chief Executive
Officer
Enclosure
<PAGE>
Preliminary Copy Dated May 19, 1994
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A PRELIMINARY COPY OF THE CONSENT SOLICITATION
STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO CONSENTS ARE BEING DISTRIBUTED NOR MAY ANY
CONSENTS BE ACCEPTED PRIOR TO THE FILING OF THE DEFINITIVE COPY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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
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"). 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.
The Amendments 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 WILL BE MAILED TO HOLDERS ON OR
ABOUT JUNE 1, 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.
<PAGE>
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: Barbara McCluskey
Telephone: (212) 858-2210
Fax: (212) 858-2952
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.
<PAGE>
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK TIME, ON
FRIDAY, JUNE 10, 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.
<PAGE>
<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 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 .50% 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
<PAGE>
</TABLE>
<TABLE>
<S> <C>
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: Barbara McCluskey
Telephone: (212) 858-2210
Fax: (212) 858-2952
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>
<PAGE>
PURPOSE
The purpose of this solicitation is to obtain approval of
the proposed Amendments to the Indenture under which the Bonds
were issued. Since completion of the Bond Offering in May 1993,
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 approximate 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 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 a gaming vessel and related
dockside improvements in East Chicago, Indiana. Showboat,
through Subsidiaries, will own fifty-five percent (55%) of the
partnership interests and its partner, Waterfront Development &
Entertainment, Inc. will own forty-five percent (45%) of the
partnership interests. The partnership is the only applicant for
the East Chicago gaming berth. The Indiana Gaming Commission is
expected to make a decision regarding the East Chicago gaming
license in early 1995. 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 in excess of 60,000 square feet of gaming area and the
related dockside improvements; and
(iii) It 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 will provide working capital for start-up
operations. Showboat, through Subsidiaries, will lend up to $35
million to the St. Regis Mohawk Tribe for the renovating,
expanding and outfitting of a building containing, after
expansion, up to an approximately 30,000 square foot casino with
approximately 80 table games. In addition, a portion of the loan
will be used for working capital
<PAGE>
and for start-up operation purposes. The Agreement contemplates
the payment of a management fee to Showboat 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. Approval of the
Environmental Protection Agency is also required prior to the
construction of the casino facility. 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 Showboat's investment in SHCH will
substantially deplete permitted funds for investment in non-
wholly owned gaming opportunities.
BACKGROUND AND PURPOSE OF THE PROPOSED AMENDMENTS
Description of Proposed Amendments
Showboat seeks the Holders' consent to proposed Amendments,
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.
<PAGE>
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 an
investment by Showboat in a gaming venture in which Showboat owns
at least 50% of the voting equity of the entity and manages the
day-to-day operations of the entity (or which is not managed by
an outside party). Showboat's approximate 27% investment in SHCH
will be specifically included as a Controlled Entity. All
investments in the Controlled Entities and management fees
(subject to gaming or other third party approvals) will be
pledged to provide additional collateral for the Bonds. 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 Agreement
will have a term of 12 years and the management fee is expected
to be based on both the total revenue and the gross operating
profit of the Sydney Harbour Casino. Showboat's investment in
the Sydney Harbour Casino and the Management Agreement (subject
to Gaming Authority approval) will be pledged as additional
collateral for the Bonds. The Company also expects to designate
its proposed East Chicago investments as a Controlled Entity if
it is awarded a gaming license to operate a gaming vessel.
<PAGE>
The following table gives comparative statistics on
Australian casinos.
<TABLE>
<CAPTION>
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.
(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. 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.
<PAGE>
(c) Permit Showboat to pay its Regular Quarterly
Dividend and make certain Restricted Payments current
by Section 4.09(b). A Regular Quarterly Dividend is a dividend
regularly and normally declared and paid by Showboat in accordance
with its prior business practices. The additional debt permitted
to be incurred as a result of this Consent Soliictation 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 Comapny 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.
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.
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.
<PAGE>
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.
Consideration for Consenting
Showboat will pay to Holders who Consent to the proposed
Amendments a cash fee equal to .50% 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
June 10, 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.
<PAGE>
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. 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
<S> <C> <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. Shareholders 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
<PAGE>
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
<PAGE>
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).
<PAGE>
EXHIBIT A
SHOWBOAT, INC.
CONSENT FORM
TO: Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: Barbara McCluskey
IBJ Schroder Bank Trust Company
One State Street
New York, New York 10004
Telephone: (212) 858-2210
Fax: (212) 858-2952
RE: Consent Solicitation dated May 20, 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 and as of today's date the outstanding principal balance
owed to the Holder on said Bonds is $__________. 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:
<PAGE>
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 Person which (i) is
designated by the Issuer as a "Controlled Entity," (ii)
is a Non-Recourse Subsidiary of which at least 50% of
the common equity is owned, directly or indirectly, by
the Issuer or a wholly-owned Subsidiary of the Issuer
(other than a Non-Recourse Subsidiary) or which is
SHCH, (iii) to the extent that such Person or any of
its Subsidiaries is engaged in gaming operations, such
Person or such Subsidiary of such Person is a Managed
Entity, (iv) all of the Investments in which (including
without limitation, in the form of capital stock,
notes, receivables or other instruments evidencing such
Investments held directly by the Issuer or any of its
Subsidiaries (other than a Non-Recourse Subsidiary))
are pledged as Collateral to secure the Bonds pursuant
to the Related Documents, and (v) to the extent
permitted by regulatory authorities or other third
parties, the income received by the Issuer or any of
its Subsidiaries (other than a Non-Recourse Subsidiary)
in respect of any management contract with respect to
such Controlled Entity or its Subsidiaries is pledged
as Collateral to secure the Bonds pursuant to the
Related Documents.
"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
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 nor
quarterly dividend and paid by the Issuer in accordance
with the Issuer's prior business practices.
"SHCH" means Sydney Harbour Casino Holdings Limited, a
New South Wales corporation.
<PAGE>
"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 of any of its Subsidiaries
(other than a Non-Recourse Subsidiary).
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 and/or any
Subsidiary of up to $150 million in aggregate principal
amount of Indebtedness outstanding at any one time
under this clause (x); 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 by Collateral and such
Indebtedness must be expressly subordinated in right of
payment to the Bonds."
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-Recours Subsidiary payable
to another 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
<PAGE>
Controlled Entities provided that Investment in SHCH
exceeding $110 million shall be a Restricted Payment
provided, however, neither the Issuer nor any Guarantor
shall invest any portion of the Las Vegas Showboat or
the Atlantic City Showboat in a Controlled Entity; 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 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."
With respect to all of the foregoing Amendments, the
undersigned hereby consents to the foregoing Amendments.
This Consent Form has been executed by the undersigned
Holder as of the ____ day of _________________, 1994.
By:_________________________
Its:________________________
And:________________________
Its:________________________
<PAGE>
NOTARY BLOCKS FOR NON-INDIVIDUALS
STATE OF ________________)
) ss.
COUNTY OF________________)
The foregoing instrument was acknowledged before me this
day of _______________, 1994, by ____________________________
and __________________________, the _________________________
and __________________________ of __________________________,
a _______________________, for and on behalf of
said _______________________.
______________________
Notary Public
NOTARY BLOCK FOR INDIVIDUAL
STATE OF ________________)
) ss.
COUNTY OF _______________)
The foregoing instrument was acknowledged before me this
____ day of _____________, 1994, by _______________________, an
individual residing at ________________________________________,
___________________, _______________.
_____________________
Notary Public
