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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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14a-6(e)(2))
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/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
(Name of Registrant as Specified in its Charter)
________________________________________________________________________________
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To Our Shareholders,
1996 was a year of tremendous change for the Company. It also marked the
beginning of the transition to what we hope will be an exciting future. During
the last half of the year, a new business plan began taking shape, the focus of
which is to (i) provide the Company with a capital structure to allow it to
pursue its business plan, (ii) redefine the Company's business, (iii) increase
the Company's profitability, (iv) position the Company for growth, and (v)
develop a product identity and brand name which will aid the Company's marketing
and sponsorship development opportunities.
CAPITAL STRUCTURE
At mid year, the Company had approximately $46 million in senior debt,
subordinated convertible debt and convertible preferred stock. Its senior bank
debt was in default, it had leases on key parks which were set to expire and it
had no capital available for park repairs, improvements or redevelopment. The
infusion of capital resulting from the MEI Holdings' investment and the
Company's new credit agreement has provided much needed capital for the Company.
Maturing and defaulted indebtedness has been repaid, all of the Company's
preferred stock and substantially all of the convertible indebtedness has been
redeemed or converted into permanent capital and the Company's total debt now
stands at approximately $29.9 million. Expiring leasehold interests in the
Company's key parks have been extended or acquired wherever appropriate,
including the acquisition of the land at the Company's Puente Hills California
park during the fourth quarter. Additional capital will be required in order to
complete the implementation of the new business plan. However, with the
substantial infusion of equity capital in 1996 and a debt structure that
requires less than $3 million of amortization over the next three years, we are
hopeful that capital will be available at reasonable costs.
REDEFINING THE BUSINESS
During the last several months, the Company's management team has examined our
competitive positioning in each of our markets. An analysis was completed of the
ways in which the Company operates its parks and attractions, the customers it
attracts and the types of attractions presented in the Company's parks. As a
result of this effort, the Company's park strategies have been segmented as
follows:
Small Parks Located in Secondary Markets
Fifteen of the Company's parks are smaller parks located in secondary markets.
In 1996, these parks generated total revenues of $4.5 million, and EBITDA of
approximately $147,000. The Company has determined that these parks do not fit
within its "go forward" strategic parameters and plans to sell or close these
parks.
Well-Located "Racing-Oriented" Parks in Major Markets
Seventeen of the Company's parks are Malibu Grand Prix parks whose principal
customer is the young adult (18-34 years old). These customers are primarily
attracted by the parks' Grand Prix racing venue. To further address this target
customer, the Company has developed a new park concept which will be called
"Malibu SpeedZone", which combines Grand Prix racing with three other racing
attractions, miniature golf, a state-of-the-art video game building,
substantially upgraded food and beverage service, meeting rooms and an outdoor
pavilion area to accommodate group business.
Three SpeedZone parks are currently being constructed or redeveloped for an
anticipated opening in time for the Memorial Day Holiday.
It is anticipated that a number of the Company's other racing-oriented parks
will be redeveloped into the Malibu SpeedZone product once the concept is
refined and assuming the availability of capital at a reasonable cost.
Family-Oriented Parks
The Company has 11 parks whose primary customers are families with young or
adolescent children.
We expect that this group of parks will be managed separately from the young
adult parks to enable them to focus on the particular needs of the family market
IMPROVE PROFITABILITY
"Best Practices" standards are being established for each attraction and
management practice.
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These "best practices" standards will be institutionalized and implemented
throughout the Company's parks with the objective of improving our operating
margins and enhancing our customer's entertainment experience.
The Company has also begun the process of strengthening its sales and marketing
capabilities. The sales and marketing effort will initially focus on generating
additional business for the parks during the Company's non-peak business hours
and fostering customer excitement and repeat business for the Company's parks.
Finally, the Company's overhead and other costs will be reduced to a level
appropriate for its revenues.
GROWTH OF THE COMPANY'S BUSINESS
The Company will continue to explore opportunities for growth through
acquisitions of parks in its current geographical areas or in areas which the
Company believes will be strategic in the future. This process was begun in 1996
with the acquisition of partnership interests that the Company did not already
own in five FEC's previously developed by the Company for third parties.
Additional growth is expected to come from the development of parks in the
Company's current and future strategic geographical areas through its in-house
development and construction capabilities and through joint venture alliances
with third parties.
We also believe that international development and alliance opportunities are
likely to develop once the Company's various product concepts are proven. To
this end, in 1996 the Company reacquired the international development rights
which it had previously sold.
NAME RECOGNITION AND SPONSORSHIPS
Subject to shareholder approval at the Company's Annual Meeting, the Company's
name will be changed (the Company's AMEX trading symbol will not change) to
"Malibu Entertainment Worldwide, Inc.". The Company has been operating 20 of its
parks as Mountasia Family Fun Centers (many of which will be sold or closed) and
23 of its parks under the Malibu Grand Prix banner. We believe that operating
all of the Company's facilities under the same name and capitalizing on the
consumer market's name recognition of Malibu will help to enhance the potential
for building a significant business presence, improve the effectiveness of
marketing and promotional programs and enhance the opportunities to establish
national sponsorship arrangements.
IN CLOSING:
I'd like to take this opportunity to thank all of our employees and those
consultants whom we have called upon to help during the last several months in
developing our present and future plans. I also would like to thank all of our
shareholders for their support during this process. We still have a large task
in front of us. I invite you to attend our annual meeting of shareholders to be
held on April 28, 1997 at 10:00 A.M., Central Time, at the Harvey Hotel, Dallas
- -Fort Worth International Airport, Dallas Texas. At that meeting, we hope to
have further information to report about our progress toward the goals that we
have established.
Sincerely,
Robert A. Whitman
Chairman of the Board and
Chief Executive Officer
THIS LETTER CONTAINS FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY. THESE RISKS
AND UNCERTAINTIES ARE DETAILED FROM TIME TO TIME IN REPORTS FILED BY THE COMPANY
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING FORMS 8-K, 10-Q AND 10-K.
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