THIS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE PLAN. ACCEPTANCES
OR REJECTIONS MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN
APPROVED BY THE BANKRUPTCY COURT. THIS DISCLOSURE STATEMENT IS BEING SUBMITTED
FOR APPROVAL BUT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT.
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW JERSEY
-----------------------------------------------
In re:
GREATE BAY HOTEL AND CASINO, INC., a New Jersey Case No. 98-10001 (JW), et seq.
Corporation, GB HOLDINGS, INC., a Delaware -- ---
Corporation, and GB PROPERTY FUNDING CORP., a (Jointly Administered)
Delaware Corporation,
Chapter 11
Debtors.
-----------------------------------------------
FIFTH AMENDED SUPPLEMENT TO THE MASTER DISCLOSURE
STATEMENT PURSUANT TO SECTION 1125 OF THE BANKRUPTCY
CODE WITH REGARD TO THE FIFTH AMENDED JOINT PLAN
OF REORGANIZATION FILED BY THE OFFICIAL COMMITTEE
OF UNSECURED CREDITORS AND HIGH RIVER
COOPER PERSKIE APRIL NIEDELMAN
WAGENHEIM & LEVENSON
1125 Atlantic Avenue
Atlantic City, NJ 08041
(609) 344-3161
Eric A. Browndorf (EB-5610)
Attorneys for the Official Committee
Of Unsecured Creditors
BERLACK, ISRAELS & LIBERMAN LLP
120 West 45th Street
New York, New York 10036
(212) 704-0100
Edward S. Weisfelner (ESW-5581)
Attorneys for High River, Cyprus
LLC, and Larch LLC
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I INTRODUCTION.............................................................1
ARTICLE II SUMMARY OF THE TREATMENT OF CLAIM AND
INTERESTS UNDER THE COMMITTEE/HIGH RIVER PLAN............................4
ARTICLE III SUMMARY OF THE COMMITTEE/HIGH RIVER PLAN.................................6
3.01 Investment by High River.......................................................6
3.02. Treatment of Administrative Expense Claims.....................................7
3.03 Treatment of Priority Tax Claims...............................................7
3.04 Treatment of Old Notes Trustee Fees and Expenses...............................8
3.05 Unsecured Creditors Fund Expenses..............................................7
3.06 Classification and Treatment of Claims and Interests...........................8
3.07 Description of New Notes......................................................10
3.08 Issuance of New Common Stock..................................................11
3.09 Regulatory Conditions.........................................................12
3.10 Other Plan Provisions.........................................................13
ARTICLE IV REORGANIZATION VALUE UNDER THE
COMMITTEE/HIGH RIVER PLAN...............................................26
ARTICLE V GOVERNANCE OF THE REORGANIZED DEBTORS...................................23
5.01 Post-Confirmation Management..................................................23
5.02 Post Effective Date Control by High River.....................................25
ARTICLE VI ALTERNATIVES TO THE PLAN................................................25
ARTICLE VII VOTING REQUIREMENTS....................................................30
7.01 Parties In Interest Entitled to Vote..........................................30
7.02 Record Date...................................................................31
7.02 Voting Procedures.............................................................31
ARTICLE VIII REQUIREMENTS FOR CONFIRMATION
OF THE COMMITTEE/HIGH RIVER PLAN........................................31
8.01 Acceptance of the High River Plan.............................................32
8.02 Best Interests Test...........................................................32
8.03 Feasibility...................................................................33
8.04 Confirmation Without Acceptance of All Impaired Classes.......................33
ARTICLE IX FEDERAL TAX CONSEQUENCES................................................34
9.01 Federal Income Tax Consequences to Holders of Claims and Interests............35
9.02 Importance of Obtaining Professional Tax Assistance...........................37
i
<PAGE>
ARTICLE X CERTAIN FACTORS TO BE CONSIDERED........................................37
10.01 Variances from Projections.................................................37
10.02 Registration and Listing of Plan Securities................................37
10.03 Recovery on New Common Stock...............................................38
10.04 Recovery Class 4 Claims....................................................38
10.05 Risk of Delay or Non-Occurrence of the Confirmation Date
and the Effective Date.....................................................39
10.06 Regulatory Issues..........................................................39
10.07 Competition in Atlantic City Casino Industry...............................39
10.08 Significant Holders........................................................39
10.09 Trademarks.................................................................39
ARTICLE XI RECOMMENDATION..........................................................41
ii
</TABLE>
<PAGE>
EXHIBITS
D-1. Fifth Amended Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code dated April 7, 2000 proposed by the Official Committee
of Unsecured Creditors and High River
D-2 Icahn Letter(s) regarding financial ability of Larch and Cyprus
D-3 The Debtors' Global Development Plan 2000 - 2002 and Unaudited
Projections for Periods 1999-2002
D-4 Pro Forma Effective Date Fresh Start Balance Sheet and Tax Attributes'
Reduction Schedule
D-5 Analysis of the Committee/High River Plan
D-6 Unfair Discrimination Analysis of the Park Place Plan
D-7 Comparison of Recoveries Under the Committee/High River Plan and the
Park Place Plan.
iii
<PAGE>
ARTICLE I
INTRODUCTION
The official committee of unsecured creditors appointed in the
above-captioned cases (the "Committee"), together with Cyprus LLC ("Cyprus") and
Larch LLC ("Larch"), each either a direct or indirect wholly owned limited
liability corporation owned by Carl C. Icahn (hereinafter collectively referred
to as "High River" and, together with the Committee, the "Proponents"), provide
this Fifth Amended Supplement (the "Disclosure Supplement") to the Second
Amended Master Disclosure Statement (together with the Disclosure Supplement,
the "Disclosure Statement") prepared by the Debtors in the above-captioned cases
(the "Debtors"). The purpose of the Disclosure Statement is to disclose
information deemed to be material, important, and necessary in order for
Creditors and other interested parties to arrive at a reasonably informed
decision in exercising their right to vote for acceptance of the Fifth Amended
Joint Plan of Reorganization for the Debtors dated April 7, 2000, proposed by
the Proponents (the "Committee/High River Plan" or the "Plan") which is
presently on file with the United States Bankruptcy Court for the District of
New Jersey (the "Bankruptcy Court"). Unless otherwise defined herein, all
capitalized terms used herein shall have the meaning given to them in the
Committee/High River Plan.
ANY REPRESENTATiONS OR INDUCEMENTS MADE TO SECURE ACCEPTANCE OF THE
COMMITTEE/HIGH RIVER PLAN OTHER THAN AS CONTAINED IN THIS disclosure STATEMENT
SHOULD NOT BE RELIED UPON.
UNLESS EXPRESSLY STATED TO BE THE CASE, THE FINANCIAL INFORMATION IN
THIS DISCLOSURE STATEMENT HAS BEEN PROVIDED BY THE DEBORS AND HAS NOT BEEN
SUBJECTED TO A CERTIFIED AUDIT OR INDEPENDENTLY VERIFIED BY TEH PROPONENTS,
ALTHOUGH THE PROPONENTS HAVE REVIEWED THIS INFORMATION AND BELIEVE IT IS
REASONABLE AND HAVE ATTEMPTED TO PROVIDE ACCURATE INFORMATION FOR USE IN THIS
DISCLOSURE STATEMENT.
A COPY OF THE COMITTEE/HIGH RIVER PLAN HAS BEEN FURNISHED TO YOU
CONTEMPORANEOUSLY WITH THIS DISCLOSURE STATEMENT AND SHOULD BE READ IN ITS
ENTIRETY. ALL SUMMARIES OR OTHER REFERENCES IN THIS DISCLOSURE STATEMENT TO THE
COMMITTEE/HIGH RIVER PLAN ARE QUALIFIED BY THE ACTUAL TERMS OF the PLAN. IN THE
EVENT OF ANY CONFLICT BETWEEN THIS DISCLOSURE STATEMENT AND THE COMMITTEE/HIGH
RIVER PLAN, the PLAN WILL GOVERN.
On January 5, 1998 (the "Petition Date"), GBHC, Holdings, and Funding
filed voluntary petitions for relief under chapter 11, title 11, United States
Code, 11 U.S.C. ss.ss. 101-1330 (the "Bankruptcy Code"). The Debtors continue to
operate their businesses and manage their
<PAGE>
properties pursuant to sections 1107(a) and 1108 of the Bankruptcy Code as
debtors-in-possession.
The Committee was formed by the Office of the United States Trustee on
January 11, 1998 to protect the interests of unsecured creditors. The Committee
retained the law firm of Cooper, Perskie, April, Niedelman, Wagenheim &
Levenson, P.A. to represent its interests and advocate for the unsecured
creditors in the chapter 11 cases. The Committee retained Ernst & Young LLP
("Ernst & Young") to serve as its accountants.
Cyprus and Larch are two recently-formed Delaware limited liability
companies. Larch is wholly-owned by Carl C. Icahn and Cyprus is owned by
Starfire Holding Corporation and Barberry Corporation, each of which is
wholly-owned by Mr. Icahn. Collectively, Cyprus and Larch hold approximately
$62,833,000 (or 34%) of Old Notes. Mr. Icahn has been and continues to be an
active owner and investor in various gaming entities. Mr. Icahn's related
entities operate the Stratosphere Hotel and Casino in Las Vegas, Nevada, and own
approximately 89.6% of its common stock. In addition, Mr. Icahn's related
entities own and operate Arizona Charlie's, Inc. another Las Vegas, Nevada
casino. In addition, Mr. Icahn's related entities also recently acquired the
Boulder Strip's Sunrise Suites Hotel and Casino. Sunrise Suites is a complex
that includes an approximately 300 room hotel and a 224 space RV park. The
casino which is expected to open by May 31, 2000, will consist of a casino of
approximately 800 slot machines, 10 table games, 3 restaurants and a food court.
It will be operated under the name "Arizona Charlies East."
Mr. Icahn's related entities also hold approximately $34 million
(approximately 40%) of the Bonds of the Claridge at Park Place, Inc.,
approximately $6 million (approximately 12%) of the Bonds of Pioneer Finance
Corporation ("Pioneer"), an affiliate of a hotel and casino operation in
Laughlin, Nevada, and approximately $19 million (approximately 12%) of the Bonds
of Santa Fe Hotel, Inc., a hotel and casino operation in Las Vegas, Nevada that
is the indirect parent of Pioneer.
On February 16, 2000, the New Jersey Casino Control Commission ("Casino
Commission") determined that High River and Carl C. Icahn were security holder
qualifiers of the Sands Casino Hotel, eligible for interim casino authorization,
and deemed their applications for interim casino authorization complete. On
March 1, 2000, the Casino Commission approved the form of Interim Casino
Authorization Trust Agreement, pursuant to which the Old Notes held by High
River (and any proceeds thereof, including securities issued in exchange
therefore) will be transferred to a Trustee no later than March 17, 2000. The
New Jersey Division of Gaming Enforcement must investigate and report on the
application no later than May 17, 2000, the latest date which the Proponents
expect High River and Carl C. Icahn to receive Interim Casino Authorization.
2
<PAGE>
On October 4, 1999, the Debtors filed their Third Modified Joint Plan
of Reorganization (the "Stand Alone Plan"). The Proponents initially supported
the Stand Alone Plan. However, the confirmation hearing on the Stand Alone Plan
was adjourned upon the submission of a term sheet containing the outline of a
plan (as thereafter reduced to a written plan of reorganization and filed with
the Bankruptcy Court, the "Park Place Plan") proposed by Park Place
Entertainment Corp. ("Park Place") in conjunction with Merrill Lynch Asset
Management ("Merrill"). After reviewing the term sheet, High River determined to
propose a plan which it believes would result in a superior capital structure
and provide more value to the Creditors.
AFTER INPUT FROM THE COMMITTEE'S ACCOUNTANTS ERNST & YOUNG, AND DUE
CONSIDERATION OF ALL ALTERNATIVES, THE COMMITTEE HAS DECIDED TO REMAN AS A
CO-PROPONENT OF THE COMMITTEE/HIGH RIVER PLAN BECAUSE THE COMMITTEE BELIEVES
THAT SUCH PLAN WILL PROVIDE A MORE CERTAIN AND SUBSTANTIALLY HIGHER DISTRIBUTION
FOR THE UNSECURED CREDITORS THAN THE PARK PLACE PLAN AND IS MORE ADVANTAGEOUS
FOR THE REORGANIZED DEBTORS IN THAT IT RESULTS IN LESS DEBT AND A GREATER CASH
INFUSION. IN ADDITION, THE COMMITTEE/HIGH RIVER PLAN DOES NOT OBLIGATE THE
REORGANIZED DEBTORS TO MAKE ANY PAYMENT UNDER A MANAGEMENT AGREEMENT (AS DOES
THE PARK PLACE PLAN) AND AS A RESULT THERE WILL BE NO DIMINUTION IN VALUE TO THE
REORGANIZED DEBTORS. INCLUDED WITH THE DISCLOSURE STATEMENT ARE LETTERS OF
RECCOMENDATION FROM EACH OF THE PROPONENTS OUTLINING, IN THEIR OPINION, THE
RELATIVE MERITS OF THE COMMITTEE/HIGH RIVER PLAN OVER THE PARK PLACE PLAN.
--------------------------------------------------------------------------------
FOR THE REASONS SET FORTH HEREIN AND IN THE LETTERS, THE COMMITTEE AND
HIGH RIVER ENTHUSIASTICALLY RECOMMEND THE COMMITTEE/HIGH RIVER PLAN AND URGE ALL
HOLDERS OF GENERAL UNSECURED CLAIMS IN CLASS 4 AND ALL HOLDERS OF OLD NOTES IN
CLASS 2 TO VOTE TO ACCEPT THE COMMITTEE/HIGH RIVER PLAN AND VOTE TO REJECT THE
PARK PLACE PLAN.
TO THE EXTENT ANY CREDITOR VOTES TO ACCEPT BOTH PLANS, THE PROPONENTS
STRONGLY RECOMMEND THAT SUCH CREDITOR INDICATE ON ITS BALLOT FORMS THAT IT
PREFERS THE COMMITTEE/HIGH RIVER PLAN.
--------------------------------------------------------------------------------
3
<PAGE>
ARTICLE II
SUMMARY OF THE TREATMENT OF CLAIMS AND INTERESTS UNDER THE
COMMITTEE/HIGH RIVER PLAN
--------------------------
The Committee/High River Plan separates creditors and shareholders of
the Debtors into seven (7) classes, one of which is not impaired and does not
vote. Three other classes, those of Intercompany Note Claims, Other Subordinated
Claims, and Old Common Stock Interests, are receiving no distributions under the
Committee/High River Plan, and are therefore deemed to have voted to reject the
Committee/High River Plan. The following is a summary of the classification and
treatment of Claims and Interests under the Committee/High River Plan:
<TABLE>
<S> <C> <C> <C> <C>
Class Description Estimated Claim Voting Rights Terms of Distribution
Amount
----- ----------- ------------- ------------- ---------------------
1 Priority Claims de minimus Unimpaired, not entitled Paid in full in Cash.
to vote
2 Allowed Claims of Old $191,344,000 Impaired, entitled to vote Receive pro rata portion of $110
Notes million in New Notes and 5,375,000 shares
of New Common Stock (after the effect of
the subordination of the Intercompany
Notes).
3 Other Secured Claims $400,000 Impaired, entitled to (1) Either paid in full or otherwise treated,
depending upon the option selected by the
Proponents.
4 General Unsecured Claims $6,500,000 to Impaired, entitled to vote Receive pro rata share of
$6,900,000 (2) $5,360,000 Cash, which constitutes an
estimated 80% recovery on the midpoint of
the Proponents' estimate of total Allowed
General Unsecured Claims, or such higher
amount, up to 100% of the estimated total
Allowed amount of such Claims, as may be
determined to be consistent with section
1129(b) of the Bankruptcy Code.
(1) Subject to the Proponents' right under the Committee/High River Plan to
render Holders of Claims in Class 3 unimpaired.
(2) The Debtors estimate of total Allowed General Unsecured Claims is $6.7 million.
4
<PAGE>
5 Intercompany Notes $18,482,000 Impaired, deemed to reject Allocated 995,079 shares of New
Common Stock which are then
distributed to Holders of Old
Notes pursuant to applicable
subordination agreements.
Retains no property and receives
no distribution.
6 Other Subordinated -0- Impaired, deemed to reject None.
Claims
7 Old Common Stock N/A Impaired, deemed to reject None.
Interest
</TABLE>
Calculation of Estimated Recoveries On Old Notes
The Allowed amount of total Old Note Claims is deemed to be
$191,344,000, which includes both principal plus accrued prepetition interest.
The appraised value of the Collateral securing the Old Note Claims is
approximately $110,000,000. Utilizing these assumptions and pursuant to section
506 of the Bankruptcy Code, holders of Old Note Claims are deemed to have an
Allowed Secured Claim in the amount of $110,000,000 and an Allowed unsecured
deficiency Claim in the amount of $81,344,000. Under the Committee/High River
Plan, the holders of Old Notes will receive (a) New Notes in the aggregate
principal amount of $110 million and (b) 5,375,000 shares of New Common Stock,
representing 53.75% of the equity of the Reorganized Debtors (after the effect
of the subordination of the Intercompany Notes).
The Proponents believe that the value of the New Notes is their face
amount, i.e., $110 million. Park Place and Merrill Lynch contest this valuation.
There are a variety of methodologies that can be utilized to determine the value
the New Common Stock. One method is to use the actual market value, i.e., the
amount a third party, High River, is paying for 46.25% of the New Common Stock.
Using this methodology, the value of the New Common Stock to be distributed to
holders of Old Notes is approximately $75.5 million, based on the fact that High
River is paying $65 million for the remaining 46.25% of New Common Stock.
Utilizing these values, under the Committee/High River Plan the Holders of Old
Notes will recover 100% of the Allowed amount of their Secured Claim and
approximately 75.7% of the Allowed amount of their unsecured deficiency Claim,
for a total recovery of approximately 97% on the total Allowed amount of Old
Notes.
Alternatively, the value of the New Common Stock can be derived from
projections of the future financial performance of the Reorganized Debtors.
Based on recently updated financial projections prepared by the Debtors, a copy
of which is annexed hereto as Exhibit D-3, and using valuation methodologies
similar to those adopted by the Park Place Plan, the implied value of the New
Common Stock to be distributed to Holders of Old Notes is in the range of $66
5
<PAGE>
million to $83.4 million. The details of this valuation analysis are annexed
hereto as Exhibit D-5. Utilizing these forms of implied valuation, under the
Committee/High River Plan the Holders of Old Notes will recover 100% of the
Allowed amount of their Secured Claim and a range from
66% to 84% of the Allowed amount of their unsecured deficiency Claim, for a
total recovery in a range from 92% to 101% of the total Allowed amount of the
Old Notes.
Recoveries on General Unsecured Claims
Total Allowed General Unsecured Claims (Class 4) are estimated by the
Proponents to be approximately $6.5 million to $6.9 million. The Debtors have
estimated the amount to be approximately $6.7 million. Under the Committee/High
River Plan, Class 4 Creditors will receive their pro rata share of Cash in the
amount of $5,360,000, representing an estimated 80% recovery on the midpoint of
the Proponents' estimate of total Class 4 Claims. Park Place has taken the
position in their plan that Class 4 Claims may receive a distribution of 100% of
the Allowed amount of the Claims without running afoul of the prohibition on
unfair discrimination found in section 1129(b) of the Bankruptcy Code. The
Proponents believe Park Place is wrong and that the Park Place Plan is,
consequently, unconfirmable. If, however, the Bankruptcy Court determines that
Park Place is correct and that Holders of Claims in Class 4 may receive more
value than is to be distributed on account of the unsecured deficiency Claims of
the Class 2 Creditors (Old Notes), then the amount of cash to be made available
to Class 4 Creditors under the Committee/High River Plan shall be increased so
that estimated recoveries will rise to the level, up to 100%, that the
Bankruptcy Court determines does not unfairly discriminate.
ARTICLE III
SUMMARY OF THE COMMITTEE/HIGH RIVER PLAN
3.01 Investment by High River
The Committee/High River Plan provides for a substantial infusion of
new capital by High River. Under the terms of the High River Stock Purchase
Agreement, High River will buy 46.25% of the New Common Stock for $65 million in
Cash. It is currently contemplated that the proceeds of that investment,
together with the Debtors' unencumbered cash, will be utilized to consummate the
Committee/High River Plan (an estimated $4,000,000 in priority and
administrative expenses, including attorneys' fees and Indenture Trustee fees)
and for general corporate purposes consistent with the Debtors Global
Development Plan 2000-2002, annexed hereto as Exhibit D-3. Nevertheless, there
is no guarantee that each and every component of the Global Development Plan
2000-2002 will be implemented or that they will be implemented on the time
frames suggested therein. Failure to initiate, or delay in initialization or
completion of,
6
<PAGE>
any of the material capital expenditure proposals described in Exhibit
D-3 could have an adverse impact on the valuation of creditor recoveries
discussed in Exhibits D-5 and D-6.
By virtue of various provisions of the New Indenture, the Reorganized
Debtors will be limited in its ability to dividend any of the subject $65
million cash infusion to shareholders. Indeed, and except as otherwise provided
in the New Indenture, for a period of 5 years following the Effective Date,
Reorganized Debtors may not pay any dividends to High River.
A copy of the High River Stock Purchase Agreement will be included in
the Plan Supplement. Carl C. Icahn, whose net worth exceeds $1 billion has
committed that he will ensure that Cyprus and/or Larch will, as of the Effective
Date, possess sufficient liquid funds to fulfill their obligations under the
High River Stock Purchase Agreement. Copies of letters to that effect are
annexed as Exhibit D-2.
3.02. Treatment of Administrative Expense Claims.
All Allowed Administrative Expense Claims shall be paid in full in Cash
within five (5) days of the later of (i) the Effective Date and (ii) the date on
which the Allowed amount of such Claim has been fixed by a Final Order. All
requests by Professionals for final allowance of compensation and reimbursement
of expenses accrued as of the Confirmation Date must be Filed with the Court
within sixty (60) days of the Confirmation Date and will be paid within five (5)
days after such Claims become Allowed. The estimated amount of unpaid fees and
expenses of Professionals as of the Effective Date will be deposited by the
Debtors in a segregated account on or about the Effective Date. The Proponents
reserve the right to challenge the allowance of any Administrative Expense
Claim. The Debtors estimate that on the Effective Date, total unpaid Allowed
Administrative Expense Claims, other than Professionals' fees and expenses
("Administrative Operating Expense Claims"), will be $750,000, consisting
primarily of approximately $210,700 in deferred fees due NJMI pursuant to the
interim settlement agreement approved by the Bankruptcy Court on or about July
8, 1998, and a confirmation payment due to GBCC of $500,000. The Debtors and
Reorganized Debtors are authorized to pay Administrative Operating Expense
Claims in accordance with their terms without the need for a further Order of
the Bankruptcy Court. The Debtors estimate accrued and unpaid Administrative
Expense Claims of Professionals as of December 31, 1999 are not greater than
approximately $2,000,000, exclusive of the amounts discussed in Section 3.04
below.
3.03 Treatment of Priority Tax Claims.
At the option of the Proponents, each Holder of an Allowed Priority Tax
Claim shall receive either (a) Cash in full payment of its Claims on the
Effective Date (or as soon thereafter as practicable) or (b) deferred Cash
payments over a period not exceeding six (6) years from the date of assessment
of such claim, in the full Allowed amount of such Claim, plus interest accruing
at the applicable legal rate from the Effective Date. Deferred payments shall be
made in
7
<PAGE>
equal quarterly installments beginning on the later of (i) the Effective Date
(or as soon as practicable thereafter), or (ii) the entry of a Final Order
fixing the Allowed amount of such Claim. All such Claims may be prepaid at any
time without premium or penalty. The Debtors had estimated that total Allowed
Priority Tax Claims were approximately $5,000. The Debtors have recently
indicated that anticipated amendments to their New Jersey corporate business tax
returns for 1993-1996 may create additional tax liability of approximate
$300,000 to $500,000 a portion of which may constitute priority Tax Claims. The
Proponents believe that New Jersey may be barred from asserting these claims for
failure to file a timely proof of claim. The Proponents reserve the right to
challenge the allowance of the Priority Tax Claims.
3.04 Treatment of Old Notes Trustee Fees and Expenses.
After application to the Bankruptcy Court, to be made within sixty (60)
days of the Confirmation Date, and in an amount determined by Final Order, the
Reorganized Debtors will pay all reasonable Allowed fees and expenses of the Old
Notes Trustee incurred in or in connection with the Cases. Nothing contained in
the Committee/High River Plan affects the Old Notes Trustee's rights pursuant to
the Old Notes Indenture to assert a lien on the distributions due to Holders of
Old Notes to secure payment of its fees and expenses. The reasonable fees and
expenses incurred by the Disbursing Agent on and after the Effective Date in
making distributions to Holders of Old Notes under the Committee/High River Plan
shall be paid by the Reorganized Debtors in the ordinary course. If the Old
Notes Trustee does not serve as the Disbursing Agent, then the Plan Securities
distributed to the Disbursing Agent may be subject to the lien of the Old Notes
Trustee under the Old Notes Indenture. It is estimated that the Old Notes
Trustee's fees and expenses will range between $900,000 and $1,000,000.
3.05 Unsecured Creditors Fund Expenses.
After the Effective Date, the Reorganized Debtors shall from time to
time reimburse the Unsecured Creditors Fund Administrator for its expenses,
including attorneys fees, incurred in administering the Unsecured Creditors
Fund, inclusive of any fees incurred in negotiating and/or litigating the
pending personal injury matters, ("Fund Expenses") in an amount that shall not
exceed $200,000. The remaining Fund Expenses, if any, shall be paid from the
Unsecured Creditors Fund. While the Proponents believe that Fund Expenses are
likely not to exceed $200,000, there can be no guarantee that these expenses
will be so limited. The resolution of all contested Claims by the Fund
Administrator and the payment of all Fund Expenses is subject to approval or
allowance by the Bankruptcy Court.
3.06 Classification and Treatment of Claims and Interests.
8
<PAGE>
The Claims and Interests of Creditors and shareholders of the Debtors
are divided into seven (7) Classes, as follows:
Class 1 - Priority Claims
Class 1 Claims consist of all Allowed Claims against the Debtors
arising on or prior to the Petition Date which are entitled to Priority Claim
status, other than Priority Tax Claims and Administrative Expense Claims. The
Debtors estimate that Claims in this Class are de minimus.
Class 1 is unimpaired. Holders of Allowed Priority Claims will be paid
the Allowed amount of such Claims, including all applicable interest and other
charges to which the Holders of such Allowed Priority Claims may be entitled
under applicable law or contract, to the extent permitted under the applicable
provision of section 507(a) of the Bankruptcy Code, in Cash, on the later of:
(a) the Effective Date (or as soon thereafter as is practicable) and (b) the
first Business Day after such Claims become Allowed Claims (or as soon
thereafter as is practicable).
Class 2 - Old Note Claims
Class 2 consists of all Allowed Claims of Holders of Old Notes. Claims
in this Class are deemed Allowed in the amount of $191,344,000, consisting of
unpaid principal plus accrued prepetition interest.
Class 2 is impaired. Holders of Old Notes will receive their pro rata
share of (a) $110 million in New Notes and (b) 5,375,000 shares of New Common
Stock, representing 53.75% of the issued and outstanding New Common Stock.
The New Common Stock and New Notes issued under the Committee/High
River Plan will be issued pursuant to an exemption from registration under
section 1145 of the Bankruptcy Code. Following the Effective Date, the
Reorganized Debtors will use their reasonable best efforts to register the New
Notes and the New Common Stock (the "Plan Securities") and have each listed on a
national securities exchange.
Class 3 - Other Secured Claims
Class 3 consists of all Allowed Secured Claims other than the Old
Notes. Claims in this Class are estimated by the Debtors to total approximately
$400,000.
Class 3 may be unimpaired depending upon the treatment option selected
by the Proponents. Holders of Allowed Secured Claims, other than Holders of Old
Notes, at the option of the Proponents, will either (a) be paid in full in Cash
the Allowed amount of such Secured Claim in full satisfaction and discharge of
such Creditor's lien, (b) receive deferred Cash
9
<PAGE>
payments totaling the Allowed amount of such Claim of a value as of the
Effective Date at least equal to the value of such Creditor's interest in the
Collateral securing such Claim, and shall retain the lien securing such Claim
and all rights under any instrument evidencing such Claim until paid as provided
herein, (c) receive, pursuant to abandonment by the Debtors, possession of and
the right to foreclose its lien on the Collateral securing such Claim, or (d) be
treated in accordance with an agreement with the Holder of such Claim. In the
event the treatment provided in subparagraphs (a), (b) or (c) above results in
payment to such Creditor of less than the Allowed amount of its Claim, the
Creditor will receive for its deficiency Claim a distribution from the
Reorganized Debtors equal to the amount it would have received if its deficiency
Claim were treated as a General Unsecured Claim. This distribution will be made
directly from the Reorganized Debtors and not from the Unsecured Creditors Fund.
Class 4 - General Unsecured Claims
Class 4 consists of all Allowed General Unsecured Claims. The Debtors
estimate that total Allowed Class 4 Claims are approximately $6,700,000; the
Proponents believe that the range of Allowed Class 4 Claims is $6,500,000 to
$6,900,000.
Class 4 is impaired. Holders of Allowed General Unsecured Claims will
receive, in Cash, on the later of the Effective Date or the date on which such
Claim becomes an Allowed Claim, a pro rata share of the Unsecured Creditors
Fund. The Unsecured Creditors Fund will consist of Cash deposited by the
Reorganized Debtors on the Effective Date (the "Fund Deposit") equal to
$5,360,000, which is estimated to provide for a 80% recovery on the midpoint of
the Proponents' estimate of the total amount of Class 4 Claims; provided,
however, that if the Bankruptcy Court determines that Holders of Class 4 Claims
may receive more value than is to be distributed on account of the unsecured
deficiency Claims of Class 2 Creditors (Old Notes), the Fund Deposit shall be
increased to the level that would afford, up to an estimated 100% dividend on
the estimated total Allowed Class 4 Claims, that the Bankruptcy Court determines
does not unfairly discriminate pursuant to section 1129(b) of the Bankruptcy
Code.
Class 5 - Intercompany Note Claims
Class 5 consists of all Allowed Claims of Holders of Intercompany
Notes. Class 5 Claims total approximately $18,482,000, consisting of a face
amount of $15 million plus accrued prepetition interest.
Class 5 is impaired. Holders of Intercompany Notes in Class 5 will be
allocated New Common Stock in an amount equal to 995,079 shares. However, all
New Common Stock allocated to Intercompany Note Claims shall be distributed to
Holders of Old Notes, pursuant to the contractual subordination of the
Intercompany Notes to the Old Notes. Holders of Claims in this Class shall
receive no distributions in respect of their Claims. Accordingly, Class 5 is
deemed to have rejected the Committee/High River Plan.
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Class 6 - Other Subordinated Claims
Class 6 consists of all Allowed Other Subordinated Claims against any
Debtor. The Debtors have stated that they are presently unaware of any
liquidated, non-contingent and undisputed Claims in this Class.
Class 6 is impaired. Holders of Allowed Claims in Class 6 will receive
no distribution in respect of their Claims. Accordingly, Class 6 is deemed to
have rejected the Committee/High River Plan.
Class 7 - Old Common Stock and Interests
Class 7 consists of all Old Common Stock Interests in the Debtors.
Class 7 is impaired. Holders of Old Common Stock Interests in Class 7
will receive no distribution in respect of their Interests and/or Claims. All
Old Common Stock in each Debtor will be cancelled and extinguished. Accordingly,
Class 7 is deemed to have rejected the Committee/High River Plan.
3.07 Description of the New Notes.
The New Notes will be issued by Reorganized Funding in the principal
amount of $110 million, will be issued in integral multiples of $1,000, and will
be unconditionally guaranteed by Reorganized Holdings and Reorganized GBHC. The
New Notes Trustee will be identified by the Proponents at or prior to the
Confirmation Hearing.
The New Notes will bear interest at the rate of 11% per annum, payable
semiannually to holders of record on a 30/360 day basis, beginning six (6)
months after the Effective Date. The unpaid principal balance and all accrued
interest on the New Notes will be due and payable in full five (5) years after
the Effective Date.
The New Notes will be secured by substantially all of the assets of the
Reorganized Debtors. Pledged assets will include the assets that currently
secure the Old Notes and additional real property controlled by the Debtors in
Atlantic City, including but not limited to the Midtown - Bala parcels, but
excluding the property located at 32 North Texas Avenue, Atlantic City, New
Jersey. The New Notes will not be secured by gaming receivables, Casino
Reinvestment Development Authority investments, or gaming revenue.
It is anticipated that the New Notes Indenture will provide that none
of the Reorganized Debtors may enter into any material transaction with any
other affiliated entity that is not a Reorganized Debtor except for transactions
that are upon terms which the Reorganized Debtors' Boards of Directors determine
(including a majority of independent directors) are no less favorable to the
Reorganized Debtors than would be obtained in an arm's-length transaction with
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a non-affiliate. It is also anticipated that the New Notes Indenture will
provide that Reorganized Holdings will pay no dividends or repurchase any of its
capital stock (other than pursuant to the Committee/High River Plan) to the
extent that the amount of such payments or purchases exceed the sum of (a) 50%
of the Reorganized Debtors' consolidated net income from and after the Effective
Date through the last day of the last accounting period for which financial
statements are available, all taken as one period (or, if such consolidated net
income is a negative, then minus 100% of such deficit), plus (b) 100% of all net
proceeds received by Reorganized Holdings from the sale of equity interests
after the Effective Date. For a period of 5 years following the Effective Date,
Reorganized Debtors may not pay any dividends to High River, except in the event
that the EBITDA to interest expense ratio exceeds 3.5 to 1, then dividends would
be permitted. In addition, the New Notes Indenture will contain other covenants
that are standard and typical for debt instruments of this type.
A notice of the filing of the New Notes Indenture will be provided to
Creditors whose votes are being solicited no later than 20 days prior to the
deadline for submission of Ballots in respect of the Committee/High River Plan,
to afford such Creditors the opportunity to review the New Notes Indenture prior
to casting their Ballots.
The Reorganized Debtors will use their reasonable best efforts to cause
the New Notes to be registered and listed on a national securities exchange.
3.08 Issuance of the New Common Stock
The Committee/High River Plan provides for the acquisition by High
River of 4,625,000 shares of New Common Stock, pursuant to the High River Stock
Purchase Agreement, representing 46.25% of the total number of shares of New
Common Stock outstanding on the Effective Date, for a total purchase price of
$65 million in Cash. On the Effective Date, Reorganized Holdings will issue and
deliver 4,625,000 shares of New Common Stock, par value $.01 per share, to High
River in exchange for the High River Investment.
Reorganized Holdings will issue and deliver to the Disbursing Agent an
additional 5,375,000 shares of New Common Stock for distribution to Holders of
Old Notes. The Reorganized Debtors will use their reasonable best efforts to
cause the New Common Stock to be registered and listed on a national securities
exchange.
3.09 Regulatory Conditions.
The Reorganized Debtors and the Disbursing Agent are not obligated to
deliver Plan Securities to any Holder of Class 2 Claims (Old Notes) until and
unless all Regulatory Conditions to issuance of such Plan Securities to such
Holder either have been satisfied, waived, or are not applicable to such Holder.
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In particular, the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et
seq. (the "Casino Act") imposes certain restrictions upon the ownership of
securities issued by a corporation that holds a casino license or is a holding
company of a corporate licensee. Among other restrictions, the sale, assignment,
transfer, pledge or other disposition of any security issued by a corporate
licensee or holding company is subject to the regulation of the Casino
Commission. In the case of corporate holding companies whose stock is publicly
traded, the Casino Commission may require divestiture of the security held by a
disqualified holder such as an officer, director, or controlling stockholder who
is required to be qualified under the Casino Act.
Noteholders are also subject to the qualification provisions of the
Casino Act and may, in the sole discretion of the Casino Commission, be required
to make filings, submit to regulatory proceedings and qualify under the Casino
Act. If an investor is an "Institutional Investor" such as a retirement fund for
governmental employees, a registered investment company or adviser, a collective
investment trust, or an insurance company, then, in the absence of a prima facie
showing by the Division of Gaming Enforcement (the "DGE"), that the
"Institutional Investor" may be found unqualified, the Casino Commission shall
grant a waiver of this qualification requirement if the investor will own (i)
less than 10% of the common stock of the company in question on a fully diluted
basis, (ii) less than 20% of such company's indebtedness or (iii) less than 50%
of an outstanding issue of indebtedness of such company, subject to the
limitation in (ii) of this paragraph. The Casino Commission, upon a showing of
good cause, may, in its sole discretion, grant a waiver of qualification to an
"Institutional Investor" not satisfying the above criteria. An Institutional
Investor must also purchase securities for investment and have no intent to
influence the management or operations of the such company. The Casino
Commission may, in its sole discretion, grant a waiver of the qualification
requirement to investors not qualifying as "Institutional Investors" under the
Casino Act if such investor will own less than 5% of the publicly traded common
stock of such money on a fully diluted basis or less than 15% of the publicly
traded outstanding indebtedness of such company.
The Casino Act provides that a holder that is not qualified shall not
be permitted to exercise the rights or receive the benefits possessed of a debt
holder and that the Casino Commission may take any necessary action to protect
the public interest, including the suspension or revocation of the casino
license. However, the Proponents believe that since the Casino Commission has
the power to prevent a holder that is not qualified from exercising rights or
receiving benefits as a debt holder, suspension or revocation of the casino
license would be unlikely.
Each Holder of the New Notes and New Common Stock and its directors,
officers, employees and affiliates are required to cooperate with the Casino
Commission and the DGE and to provide to the Casino Commission and the DGE, upon
request, all relevant information and documentation required of the Holders and
each of them.
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The Debtors are required to disclose to the Casino Commission all
proposed Holders of Plan Securities. The Proponents believe that it is likely
that the Casino Commission will require the identification of beneficial Holders
of New Notes and the extent of their holdings in order to determine whether
beneficial Holders will be required to qualify or will be granted a waiver of
qualifications. The Proponents may provide the Casino Commission with the
information set forth on Ballots executed by beneficial Holders to allow the
Casino Commission to make the necessary determination. The Proponents may also
apply to the Bankruptcy Court to compel registered Holders of Old Notes to make
disclosure as to beneficial Holders. The Casino Commission shall then make the
necessary determinations as to whether Regulatory Conditions apply to each
proposed Holder. Upon a determination by the Casino Commission as to the
restrictions, if any, on distributions of Plan Securities, the Debtors shall
notify the Disbursing Agent of the Casino Commission's determination, and the
Disbursing Agent shall act accordingly.
3.10 Other Plan Provisions
(a) Effective Date
The Committee/High River Plan will be consummated and become effective
on a Business Day which is not more than ten (10) days after all conditions to
the Effective Date have been satisfied or waived pursuant to the Committee/High
River Plan. See "Conditions Precedent to Confirmation and Effectiveness of the
Committee/High River Plan," below.
(b) Distributions
All distributions under the Committee/High River Plan will be made by
the Reorganized Debtors, or one or more Disbursing Agents as their designee. On
the Effective Date, a distribution in the amount set forth in Section 4.04 of
the Committee/High River Plan will be made to the Unsecured Creditors Fund, in
Cash. The Unsecured Creditors Fund Administrator may make interim distributions
from time to time from the Unsecured Creditors Fund after it has made a
determination that the interim distribution will not result in the depletion of
the Unsecured Creditors Fund so that there are insufficient funds to make
required future distributions. The obligation to distribute Plan Securities to
Holders of Class 2 Claims (Old Notes) is subject to satisfaction of the
Regulatory Conditions set forth in Section 8.02 of the Committee/High River
Plan.
(c) Surrender of Notes
Except as otherwise ordered by the Bankruptcy Court, in order to
receive any distribution under the Committee/High River Plan, each Holder of an
Old Notes Claim will be required to surrender all of its Old Notes to the
Disbursing Agent. Failure to comply with such requirements will bar a Holder of
Old Notes from receiving any distributions under the Committee/High River
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Plan. Notwithstanding the foregoing, all of the Old Notes will be deemed
surrendered, canceled, and of no further force or effect as of the Effective
Date, whether or not the Old Notes are delivered to the Disbursing Agent.
Delivery of the Old Notes is required for administrative convenience only and
any such delivery shall not alter a Holder of Old Notes' legal or equitable
rights against an Entity other than the Debtors, if any.
The manner and procedure to be followed for surrendering Old Notes and
for providing necessary affidavits and bonds shall be prescribed by the
Disbursing Agent, upon reasonable notice sent to all Holders of Class 2 Claims.
DO NOT RETURN YOUR OLD NOTES OR OTHER EVIDENCE OF INDEBTEDNESS WITH YOUR BALLOT.
(d) Survival of Certain Terms of the Old Notes Indenture.
Notwithstanding the termination and cancellation of the Old Notes, the
Old Notes Indenture, and the Security Documents as affects the Debtors and the
Reorganized Debtors, the provisions of the Old Notes Indenture governing the
relationship of the Old Notes Trustee and the Holders of Old Notes, including
those provisions relating to distributions, the Old Notes Trustee's right to
payment, liens on property to be distributed to Holders of Old Notes, and the
Trustee's right of indemnity, if any, shall not be affected by the
Committee/High River Plan.
(e) Options
Any options, warrants or other equity interests representing the right
to acquire Old Common Stock shall be canceled as of the Effective Date. All
Claims arising under such warrants, options, or other equity interests shall be
classified in Class 7.
(f) Executory Contracts and Unexpired Leases
The Committee/High River Plan provides that, subject to the
requirements of Section 365 of the Bankruptcy Code, all executory contracts and
unexpired leases that exist between the Debtors and any Entity, which have not
been assumed or rejected prior to the Effective Date shall be deemed rejected as
of the Effective Date, except for any executory contract or unexpired lease that
has been assumed pursuant to an order of the Bankruptcy Court entered at or
prior to the Effective Date, or which is subject to a pending application to
assume or to extend the time to assume or reject. Notwithstanding the foregoing,
all executory contracts, if any, that exist between the Debtors and any entity
concerning or relating to the Debtors' rights in the Sands Trademark shall be
assumed under the Committee/High River Plan, if susceptible to such treatment
under section 365 of the Bankruptcy Code. It is presently contemplated that no
material executory contracts or unexpired leases will be rejected by operation
of the foregoing provisions of the Committee/High River Plan.
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(g) Bar Date for Filing Proofs of Claim Relating to Executory Contracts
and Unexpired Leases Rejected Pursuant to the Committee/High River Plan
Any and all Proofs of Claim arising out of the rejection of an
executory contract or unexpired lease rejected pursuant to the Committee/High
River Plan must be Filed within thirty (30) days after the Effective Date. Any
Holder of a Claim arising out of such rejection of an executory contract or
unexpired lease who fails to File a Proof of Claim within such time shall be
forever barred, estopped, and enjoined from asserting such Claim against the
Debtors, the Reorganized Debtors, their assets, or their Estates. Unless
otherwise ordered by the Bankruptcy Court, all Claims arising from the rejection
of executory contracts and unexpired leases shall be treated as General
Unsecured Claims under the Committee/High River Plan. Nothing contained in the
Committee/High River Plan shall extend the time for Filing a Proof of Claim for
rejection of any executory contract or unexpired lease rejected prior to the
Confirmation Date.
(h) Unclaimed Distributions Under the Committee/High River Plan
(i) Non-Negotiated Checks and Other Consideration. If the
Holder of an Allowed Unsecured Claim fails to present for payment a check issued
to such Holder pursuant to this Plan within ninety (90) days of the date such
check was issued, or if any distributions are returned to the Unsecured
Creditors Fund Administrator due to an incorrect or incomplete address for which
neither the Debtors nor the Unsecured Creditors Fund Administrator have received
a correct address, then the amount of Cash or other property attributable to
such check or distribution shall be deemed to be Unclaimed Distributions in
respect of such Holder's Class of Claims and the payee of such check or
distribution shall be deemed to have no further Claim in respect of such check
or distribution, and shall not be entitled to participate in any further
distributions under this Plan. In the event that any New Notes or New Common
Stock distributable to the Holders of Old Notes has not been distributed by the
Disbursing Agent to the Holders of an Old Notes Claim within two (2) years of
the later of the Effective Date or the satisfaction of or failure to satisfy the
Regulatory Conditions, then such consideration shall be deemed to be Unclaimed
Distributions. The above time limits shall not apply to distributions to Holders
of Old Notes that the Old Notes Trustee may make pursuant to the Old Notes
Indenture that are independent of the consideration being distributed pursuant
to this Plan.
(ii) Revesting of Unclaimed Distributions. All Unclaimed
Distributions will revest in the Reorganized Debtors, except those Unclaimed
Distributions from the Unsecured Creditors Fund, which will be returned to the
Unsecured Creditors Fund Administrator for further distribution to the remaining
Holders of Allowed General Unsecured Claims, subject to the return of the Excess
Fund Deposit pursuant to Section 4.04 of the Plan.
EACH CREDITOR SHOULD CHECK THE ADDRESS TO WHICH THIS DISCLOSURE
STATEMENT WAS SENT TO ENSURE THAT IT IS A CORRECT, CURRENT ADDRESS. IF THIS
DISCLOSURE STATEMENT WAS FORWARDED BY A RECORD HOLDER IN RESPECT OF SECURITIES
HELD FOR THE BENEFIT OF ANOTHER PERSON, SUCH OTHER PERSON MAY WISH TO SEND A
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CHANGE OF ADDRESS TO THE DEBTORS IN ACCORDANCE WITH INSTRUCTIONS THAT
WILL BE CONTAINED IN A NOTICE DISTRIBUTED TO CREDITORS FOLLOWING CONFIRMATION OF
THE COMMITTEE/HIGH RIVER PLAN.
(i) Rounding and Fractional Portions
Whenever any payment of a fraction of a cent would otherwise be called
for, the actual payment shall reflect a rounding of such fraction to the nearest
whole cent, with one-half cent being rounded up to the nearest whole cent. To
the extent Cash remains undistributed as a result of the rounding of such
fraction to the nearest whole cent, such Cash shall be treated as an Unclaimed
Distribution under Section 8.09 of the Committee/High River Plan. Whenever any
distribution of a fraction of a share of New Common Stock would otherwise be
called for, the actual distribution will reflect a rounding of such fraction
down to the nearest whole number of shares. Whole shares of New Common Stock and
New Notes not distributed because of the "Rounding" provisions of the
Committee/High River Plan will be treated as unclaimed securities under Section
8.09 of the Committee/High River Plan. No fractional portions of New Notes will
be issued.
Notwithstanding the "Rounding" provisions of the Committee/High River
Plan, Fractional New Notes will be aggregated by the Disbursing Agent based upon
information on beneficial Holder Ballots or otherwise from registered Holders of
Old Notes and intermediary Holders of Old Notes, and will be delivered to the
Fractional Note Pool Trustee for sale pursuant to the Fractional Pool Trust
Agreement, with the Cash proceeds to be distributed to Holders of Old Notes in
lieu of fractional portions of New Notes. The Fractional Pool Trust will be
established for the sole purpose of aggregating, holding for so long as is
necessary and liquidating as soon as practicable for the account and benefit of
the Old Note Holders, the fractional New Notes and distributing the proceeds
thereof to the beneficial holders of Old Notes in proportion to their respective
rights to receive fractional New Notes, as directed by the Disbursing Agent.
(j) Conditions Precedent to Confirmation and Effectiveness of the
Committee/High River Plan
Confirmation of the Committee/High River Plan is conditioned
upon the occurrence of numerous transactions and events. Unless waived, the
non-satisfaction of a condition will make confirmation of the Committee/High
River Plan impossible. However, certain of such conditions may be waived by the
Debtors pursuant to Section 7.01 of the Committee/High River Plan. The following
are conditions precedent to Confirmation of the Committee/High River Plan:
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(i) the Bankruptcy Court has entered the Confirmation Order in form and
substance acceptable to the Proponents containing findings, supported by
evidence adduced at the Confirmation Hearing, or ordering, among other
things, that upon the occurrence of the Effective Date, the issuance of all
Plan Securities and the execution of any required indenture and security
documents in respect thereto shall have been duly and validly authorized by
all necessary corporate action; that the lien, title or other interest in
collateral created by such indenture and instruments shall be valid and
binding and enforceable against the Reorganized Debtors, as the case may
be, and such collateral shall be subject to no prior, pari passu or
subordinate encumbrances or claims except as provided for in such
documents; that any fractional note pool trustee as required by the
Fractional Pool Trust Agreement shall be authorized to serve as such under
the Fractional Pool Trust Agreement and shall be authorized to rely on
information concerning the identity and size of beneficial holders of the
Old Notes from registered holders of such Notes and that the disbursing
agents are authorized to aggregate and deliver fractional New Notes
aggregated into New Notes to such Fractional Pool Trustee; that, pursuant
to section 1146(c) of the Bankruptcy Code, the issuance, transfer or
exchange of notes or equity securities under the Committee/High River Plan,
the creation of any mortgage, deed of trust or other security interest, the
making or assignment of any lease or sublease, or the making or delivery of
any deed or other instrument of transfer under, in furtherance of, or in
connection with the Committee/High River Plan, including, without
limitation, any merger agreements or agreements of consolidation, deeds,
bills of sale or assignments executed in connection with any of the
transactions contemplated under the Committee/High River Plan, shall not be
subject to any stamp, real estate transfer, mortgage recording or other
similar tax; all sale transactions consummated by the Debtors and approved
by the Bankruptcy Court on and after the Petition Date through and
including the Effective Date including the sale by the Debtors of owned
property pursuant to section 363(b) of the Bankruptcy Code and the
assumption, assignment and sale by the Debtors of unexpired leases of
non-residential real property pursuant to section 365(a) of the Bankruptcy
Code, shall be deemed to have been made under, in furtherance of, or in
connection with the Committee/High River Plan and, thus, shall not be
subject to any stamp, real estate transfer, mortgage recording or other
similar tax; and that all recording officers and other entities whose
duties include recordation of documents lodged for recording shall record,
file and accept such
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(ii) documentsdelivered under the Committee/High River Plan without the
imposition of any charge, fee, governmental assessment or tax and in such
other form and substance reasonably satisfactory to the Proponents;
(iii) The Debtors have been authorized to assume all leases and executory
contracts which the Proponents may seek to assume; and
(iv) The Debtors have received the consent of any governmental units whose
consent is required for confirmation. The Committee/High River Plan
authorizes the Proponents to waive the condition (ii) above in their
discretion.
The Proponents believe that each of the foregoing conditions to
Confirmation contained in the Committee/High River Plan can or will be satisfied
or otherwise waived in accordance with the terms of the Committee/High River
Plan. The occurrence of such satisfaction or waiver is, however, dependent upon
a variety of facts and circumstances, some of which are beyond the control of
the Proponents. Thus, there can be no assurance that such conditions will be
satisfied or if not satisfied, will be waived as provided by the Committee/High
River Plan.
In addition, section 1129 of the Bankruptcy Code contains a list of
requirements which must be met before a plan may be confirmed. The Proponents
believe that each of these requirements can and will be satisfied.
Effectiveness of the Committee/High River Plan is conditioned upon (i)
the Confirmation Order becoming a Final Order; (ii) the New Notes Indenture
having been qualified under the Trust Indenture Act; (iii) no conditions (other
than Regulatory Conditions) to the issuance or authentication of the New Notes
or the New Notes Indenture are unsatisfied; (iv) the New Notes have been
authenticated and distributed to the Disbursing Agent; and (v) all other
requirements of applicable laws have been satisfied, including required
approvals of the Casino Commission. Notwithstanding the foregoing, the
Proponents may waive the condition that the Confirmation Order be a Final Order
and may consummate the Committee/High River Plan so long as there is no stay of
the Confirmation Order pending.
(k) Plan Securities Issued Under Section 1145 Exemption From
Registration.
The New Notes and New Common Stock to be issued under the
Committee/High River Plan will be issued in reliance on the exemption from
registration provided by section 1145 of the Bankruptcy Code. Generally, except
with respect to an "underwriter", as defined in section 1145(b), section 1145(a)
makes section 5 of the Securities Exchange Act of 1933, as amended (the
"Securities Act") and comparable registration requirements under local law
inapplicable to the issuance of the New Notes and New Common Stock to the
Holders of Old Notes.
A person who is not an "underwriter" may resell New Notes and New
Common Stock without registration of those securities under the Securities Act,
unless such person is a securities "dealer" as defined in section 2(12) of the
Securities Act. Under section 1145(b)(1)(A) of the
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Bankruptcy Code, an entity will be an "underwriter" if it purchases a claim
against a debtor for the purpose of receiving securities under a plan with a
view toward distribution of such securities. Under section 1145(b)(1)(B) of the
Bankruptcy Code, an entity is an "underwriter" if the entity offers to sell
securities distributed under the plan for the holders of such securities.
"Control persons" of the Debtors receiving securities under the Committee/High
River Plan are deemed underwriters. The Proponents take no position on whether
an entity is a "control person" and therefore an "underwriter" within the
meaning of section 1145 of the Bankruptcy Code, but note that the legislative
history of that provision suggests Congress believed that any Creditor receiving
at least ten percent (10%) of a reorganized debtor's securities will be a
control person.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN
FEDERAL SECURITIES LAW CONSEQUENCES OF THE COMMITTEE/HIGH RIVER PLAN AND MAY
VARY DEPENDING ON A HOLDER'S INDIVIDUAL CIRCUMSTANCES. ACCORDINGLY, HOLDERS ARE
URGED TO CONSULT WITH THEIR LEGAL ADVISORS ABOUT THE FEDERAL SECURITIES LAW
CONSEQUENCES OF THE COMMITTEE/HIGH RIVER PLAN.
(l) No Multiple Satisfactions.
An Entity that holds a Claim against more than one Debtor that arises
from the same right to payment or equitable remedy that gives rise to a right to
payment, such as a Holder of a Claim for a loan given to one Debtor, which loan
is guaranteed by another Debtor, shall only receive a distribution as if the
Entity was the Holder of a Claim against one Debtor. Such distribution shall be
deemed to be in full satisfaction of the Entity's Claims against all Debtors.
(m) Revesting of Assets.
Except as otherwise set forth therein, subject to the provisions of and
for the purposes of distributions in accordance with the Committee/High River
Plan, all property of the Estates, including all Causes of Action, shall revest
in the Reorganized Debtors on the Effective Date.
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Such revested property shall be free and clear of all liens, claims,
encumbrances, and interests, except as otherwise provided in the Committee/High
River Plan.
(n) Causes of Action.
On the Effective Date, all Causes of Action shall be vested in the
Reorganized Debtors. Those Causes of Action include all pending real estate tax
appeals, Causes of Action pertaining to the Sands Trademark, and Causes of
Action against any affiliate that have not been released as of the Confirmation
Date. The Proponents have not evaluated the Causes of Action but do not
anticipate that Avoiding Power Causes of Action will have any material value to
the Reorganized Debtors. As of the Confirmation Date, the Old Notes Trustee
shall use its best efforts to suspend any appeals or other proceedings then
pending in connection with orders of the Bankruptcy Court. As of the Effective
Date, the Old Notes Trustee shall withdraw all such proceedings with prejudice.
(o) Discharge.
Except as otherwise provided in the Committee/High River Plan and the
Confirmation Order, upon the occurrence of the Effective Date, the Debtors shall
be discharged and released from any further liability for all Claims that arose
prior to the entry of the Confirmation Order. The Unsecured Creditors Fund
Administrator and all General Unsecured Creditors will have no
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recourse against the Reorganized Debtors after the Effective Date, except the
Unsecured Creditors Fund Administrator shall have recourse for payments for
reimbursement of reasonable expenses up to $200,000 related to the
administration of the Unsecured Creditors Fund.
(p) Exculpation.
The Committee/High River Plan provides that neither the Debtors, nor
the Proponents, nor any of their officers, directors, members, employees,
advisors, consultants, attorneys, affiliates, or agents shall have or incur any
liability to any Holder of a Claim or Interest for any act or omission in
connection with, or arising out of, the Cases, the proposed confirmation or
consummation of the Committee/High River Plan, the administration of the Cases
or the Committee/High River Plan, or the property to be distributed under the
Committee/High River Plan, except for willful misconduct or gross negligence,
and in all respects shall be entitled to rely upon the advice of counsel with
respect to their duties and responsibilities under the Committee/High River
Plan. Although similar exculpatory provisions in chapter 11 plans are frequently
approved by bankruptcy courts, there is a chance that the Bankruptcy Court will
decline to approve the Committee/High River Plan's exculpation provisions as
they apply to non-debtors. Were this to be the case, the Proponents intend,
consistent with Section 12.20 of the Plan, to sever this provision and pursue
confirmation of the remaining Plan.
(q) Injunctions.
Except as otherwise expressly provided in the Committee/High River Plan
or the exceptions specified in the ADR Procedure, on or after the Effective
Date, all Persons and Entities who have held, hold or may hold (a) Claims or
Interests are, with respect to any such Claim or Interest, permanently enjoined
on and after the Effective Date from and against: (i) commencing or continuing
in any manner any suit, action or other proceeding of any kind against the
Debtors, the Reorganized Debtors, or the Estates with respect to any such Claim
or Interest (ii) the enforcement, attachment, collection or recovery by any
manner or means of any judgment, award, decree or order against the Debtors, the
Reorganized Debtors, or the Estates, (iii) creating, perfecting or enforcing any
lien or encumbrance of any kind against the Debtors, the Reorganized Debtors, or
the Estates or against any of their properties or interests in property with
respect to such Claim or Interest and (iv) asserting any right of setoff,
subrogation or recoupment of any kind against any obligation due from the
Debtors, the Reorganized Debtors, or against any property or interest in
property of the Debtors, the Reorganized Debtors with respect to any such Claim
or Interest and (b) any Claim, right, action, cause of action against or
Interest in the Debtors, the Reorganized Debtors, or the Estates shall be
permanently enjoined from and against commencing or continuing any suit, action
or proceeding against, asserting or attempting to recover any Claim against or
Interest in, or otherwise affecting the Debtors, the Reorganized Debtors, or the
Estates with respect to any matter that is the subject of the Committee/High
River Plan.
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(r) Retention of Jurisdiction.
The Committee/High River Plan provides that, notwithstanding
confirmation of the Committee/High River Plan or the occurrence of the Effective
Date, the Bankruptcy Court shall retain jurisdiction for certain purposes,
including, without limitation:
(i) To adjudicate all controversies concerning the
classification or allowance of any Claims or Interests;
(ii) To liquidate, allow or disallow any Claims which are
disputed, contingent or unliquidated;
(iii) To determine any and all objections to the allowance
of Claims or Interests, or counterclaims to any Claim;
(iv) To determine any and all applications for allowance of
compensation and reimbursement of expenses and any other fees and expenses
authorized to be paid or reimbursed under the Bankruptcy Code or the
Committee/High River Plan, including the Fund Expenses;
(v) To determine any applications pending on the Effective
Date for the rejection or assumption of executory contracts or unexpired leases
or for the assumption and assignment, as the case may be, of executory contracts
or unexpired leases to which any Debtor is a party or with respect to which it
may be liable, and to hear and determine, and if need be to liquidate, any and
all Claims arising therefrom;
(vi) To adjudicate any actions brought by the Debtors or
the Reorganized Debtors on any Causes of Action, at any time prior to
expiration of the relevant statute of limitations;
(vii) To determine any and all applications, adversary
proceedings and contested or litigated matters that may be pending on the last
date for objections to Claims;
(viii) To consider any modifications of the Committee/High
River Plan, remedy any ambiguity, defect or omission or reconcile any
inconsistency in any order of the Bankruptcy Court, including the Confirmation
Order, to the extent authorized by the Bankruptcy Code;
(ix) To determine all controversies, suits, and disputes
that may arise in connection with the interpretation, enforcement, or
consummation of the Committee/High River Plan;
(x) To consider and act on the compromise and settlement of
any Claim or cause of action by or against the Debtors or the Estates, including
but not limited to determining all controversies, suits, and disputes that may
arise in connection with the interpretation,
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enforcement, or consummation of compromises and settlements previously
approved by the Bankruptcy Court or that may be approved in the future;
(xi) To issue orders in aid of execution of the
Committee/High River Plan to the extent authorized by section 1142 of the
Bankruptcy Code;
(xii) To determine such other matters as may be set forth in
the Confirmation Order or which may arise in connection with the Committee/High
River Plan or the Confirmation Order;
(xiii) To adjudicate disputes over the issuance of New Notes
or New Common Stock to Holders of Allowed Claims; and
(xiv) To administer the ADR Procedure.
(s) Effectuating Documents; Further Transactions
The Proponents, the Debtors, and the Reorganized Debtors are authorized
to execute, deliver, file or record such contracts, instruments, releases and
other agreements or documents and to take such actions as may be necessary or
appropriate to effectuate and further evidence the terms and conditions of the
Committee/High River Plan. All transactions that are required to occur on the
Effective Date under the terms of the Committee/High River Plan shall be deemed
to have occurred simultaneously. The Old Note Trustee shall deliver in
recordable form all documents or instruments reasonably requested by the
Proponents, the Debtors, or the Reorganized Debtors to cancel of record all
mortgages, liens, security interests and encumbrances on any collateral for the
Old Notes.
(t) Post Consummation Effect of Evidences of Claims or Interests.
Notes, stock certificates and other evidence of Claims against or
Interests in the Debtors shall, effective on the Effective Date, represent only
the right to participate in the distributions contemplated by the Committee/High
River Plan.
(u) Binding Effect.
The rights, benefits, and obligations of any Entity named or referred
to in the Committee/High River Plan shall be binding upon, and shall inure to
the benefit of, the heir, executor, administrator, successor, or assignee of
such Entity. Confirmation of the Committee/High River Plan binds each of the
Holders of Claims and Interests to the terms and conditions of such plan,
whether or not such Holder has accepted such plan.
(v) Inconsistencies.
In the event there is any inconsistency between the Committee/High
River Plan and the Disclosure Statement, any exhibit to the Committee/High River
Plan, or any other instrument or
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document created or executed pursuant to the Committee/High River Plan, the
Committee/High River Plan shall govern.
(w) Compliance with Applicable Law
It is intended that the provisions of the Committee/High River Plan
(including the implementation thereof) shall be in compliance with applicable
law, including, without limitation, the Bankruptcy Code, the Securities Act, the
Internal Revenue Code ("IRC"), and the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 ("Hart-Scott-Rodino"), each as amended, as well as any rules and
regulations promulgated thereunder. On Monday, February 7, 2000, Carl C. Icahn,
together with Entities of which he is the ultimate parent Entity, made a filing
with the Federal Trade Commission and the Department of Justice pursuant to
Hart-Scott-Rodino. This filing was a notification of Mr. Icahn's intent to
acquire in excess of 50% of the Reorganized Debtors.
The thirty day waiting period under Hart-Scott-Rodino has expired and
there are no remaining impediments to the transactions contemplated by the Plan.
High River has filed with the Casino Commission an application for
Interim Casino Authorization and Plenary Qualification as Holding and
Intermediary Companies of a Casino Licensee pursuant to N.J.S.A. 5:12-95. 12 et
seq. In connection therewith, Mr. Icahn has filed an application as an
individual qualifier of High River.
On February 16, 2000, the New Jersey Casino Control Commission ("Casino
Commission") determined that High River and Carl C. Icahn were security holder
qualifiers of the Sands Casino Hotel, eligible for interim casino authorization,
and deemed their applications for interim casino authorization complete. On
March 1, 2000, the Casino Commission approved the form of Interim Casino
Authorization Trust Agreement, pursuant to which the Old Notes held by High
River (and any proceeds thereof, including securities issued in exchange
therefore) will be transferred to a Trustee no later than March 17, 2000. The
New Jersey Division of Gaming Enforcement must investigate and report on the
application no later than May 17, 2000, the latest date which the Proponents
expect High River and Carl C. Icahn to receive Interim Casino Authorization.
In 1991, the Casino Commission found Mr. Icahn qualified as an
individual qualifier of Trump Taj Mahal Associates ("TTMA") by virtue of his
indirect ownership of certain companies determined to be financial sources and
entity qualifiers of TTMA. Mr. Icahn and his related entities have also been
found suitable by the Nevada Gaming Commission.
(x) Severability
Subject to section 1127 of the Bankruptcy Code, if the Bankruptcy Court
determines at the Confirmation Hearing that any provision of the Committee/High
River Plan is invalid or unenforceable, such provision, to the extent the
Proponents agree, shall be severable from the Committee/High River Plan and null
and void, and, in such event, such determination shall in no
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way limit or affect the enforceability or operative effect of any or all other
provisions of the Committee/High River Plan.
ARTICLE IV
REORGANIZATION VALUE UNDER THE COMMITTEE/HIGH RIVER PLAN
There are a variety of methodologies that can be utilized to establish
the reorganization value of the Reorganized Debtors under the Committee/High
River Plan. One method is to calculate value by reference to the value to be
paid by High River under the Committee/High River Plan for its 46.25% ownership
of the Reorganized Debtors, i.e., $65 million. Utilizing that measurement, the
reorganization value of the Reorganized Debtors under the Committee/High River
Plan is approximately $250 million.
Alternatively, reorganization values can be derived from projections of
future financial performance. The Debtors have provided revised financial
projections for the Reorganized Debtors to reflect recent improvements in
operating performance, as well as the beneficial impact of the High River
Investment on future earnings and cash flow. These projections and the Global
Development Plan 2000 - 2002 on which the projections are based are annexed
hereto as Exhibit D-3. Based on these projections, and using valuation
methodologies similar to those adopted by the Park Place Plan, the
reorganization value of the Reorganized Debtors is estimated to be in a range of
$172 million to $204 million.
A detailed description of these various calculations of reorganization
value under the Committee/High River Plan is annexed hereto as Exhibit D-5.
ARTICLE V
GOVERNANCE OF THE REORGANIZED DEBTORS
5.01 Post-Confirmation Management. The existing Boards of Directors of
the Debtors shall remain in place until the first meeting of Holders of New
Common Stock, who shall elect a new Board of Directors of Reorganized Holdings
that may include one or more members of the Debtors' current management.
Thereafter, the Board of Directors of Reorganized Holdings may appoint the
Boards of Directors of Reorganized GBHC and Reorganized Funding.
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The names, ages, and affiliations of the Debtors' existing directors are set
forth below:
Name Age Position Held
Timothy A. Ebling 41 Executive Vice President, Chief Financial
Officer, and Director
Frederick H. Kraus 50 Executive Vice President, General Counsel,
Secretary, and Director
In November 1999, J. Timothy Smith resigned from the Board of Directors
of the Debtors.
The Debtors' current directors receive no compensation from the Debtors
but are reimbursed for their expenses in connection with their attendance at
each Board of Directors meeting.
The Debtors' current managers and their qualifications are as follows:
Alfred Luciani, 54, is president and Chief Executive Officer and joined
the Sands in November, 1999. Prior to joining the Sands, Mr. Luciani served in
the State of New Jersey Division of Criminal Justice from 1971 to 1979 as an
Assistant and Deputy Attorney General, including as a member of the Governor's
Staff Policy Group on Casino Gambling prior to passage of the New Jersey Casino
Control Act. Mr. Luciani's casino employment includes serving as Vice President
of Casino Operations of GNAC Corp. (Golden Nugget Atlantic City), as an
executive with Golden Nugget, Inc., including positions as President of GNU
Corp. (Golden Nugget Las Vegas), Executive Vice President of GNAC Corp., and
Vice President of Corporate Development for Golden Nugget, Inc., as Executive
Vice President and Chief Operating Officer of Merv Griffin's Resorts Casino
Hotel in Atlantic City, as President and Chief Executive Officer and Director of
Development of the Mashantucket Pequot Gaming Enterprise (Foxwoods), and as a
self-employed consultant. Mr. Luciani is also admitted to the practice of law in
New York and New Jersey.
Timothy A. Ebling, 41, is Executive Vice President, Chief Financial
Officer and a Director of the Sands since 1998 and has been with the Sands since
l983, serving in the positions of Assistant Manager Financial Accounting, Hotel
Controller, Casino Controller, Director Corporate Accounting and Vice President
Finance. Prior to joining the Sands, Mr. Ebling was a Senior Auditor of Touche
Ross & Co. from 1980 through 1983. Mr. Ebling is a Certified Public Accountant
and a graduate of Ohio Northern University with a B.S. degree Cum Laude in
Business Administration.
Frederick H. Kraus, 50, is Executive Vice President, General Counsel,
Secretary, and a Director of the Sands since 1998 and has been with the Sands
since 1984, serving in the positions of Assistant Corporate Counsel, Director
Legal Affairs, and Vice President Corporate Counsel. Prior to joining the Sands,
Mr. Kraus was in private practice in Philadelphia, Pa., and was a Law
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Clerk to the Hon. Paul Chalfin, Judge, Philadelphia Court of Common Pleas.
Mr. Kraus is an attorney admitted to the practice of Law in Pennsylvania and
New Jersey, a graduate of Montgomery County Community College with an A.S.
degree Summa Cum Laude, a graduate of Temple University with a B.A. degree
in Economics Summa Cum Laude, and a graduate of Temple University Law School
with a J.D. degree Magna Cum Laude.
Signe Huff, 42, is Senior Vice President Hotel Operations since 1995
and has been with the Sands since 1980, serving in the positions of Rooms
Coordinator, Assistant Front Office Manager, Front Office Manager, Central
Information Center Manager, Assistant Director Hotel Operations, Director Hotel
Operations, and Vice President Hotel Operations. Ms. Huff is responsible for
overall hotel operations, food and beverage, facilities, security, and
purchasing. Ms. Huff is a Cornell University Graduate with a B.S degree in Hotel
Administration.
Thomas Biglan, 49, is Vice President Food and Beverage since 1996, and
has been with the Sands since 1984, serving previously as Executive Chef. Under
Mr. Biglan's direction, the Sands has been the recipient of multiple awards and
recognitions for superior food and beverage products.
Paul Greco, 48, is Vice President Casino Operations since May, 1999,
and has been with the Sands since 1981, holding the positions of Floorperson,
Pit Boss, Shift Manager, Assistant Casino Manager, and Casino Manager. Prior to
joining the Sands, Mr. Greco was at Caesar's Atlantic City for two years as a
Dealer, Floorperson, and as a Marketing Executive.
Jack Przybylski, 54, is Vice President Management Information Systems
since 1998 and has been in the MIS field since 1964. He has been with the Sands
since 1979 and participated in the creation of the Sands computer systems. A
number of these systems were marketed to casinos in Atlantic City and other
gaming jurisdictions by a subsidiary of the Sands. Advanced Casino Systems Corp.
("ACSC"), an indirect subsidiary of Greate Bay Casino Corp., the indirect
corporate parent of the Sands, took over the continued development and marketing
functions of the systems in 1994. Mr. Przybylski served in dual capacities with
the Sands and ACSC from 1994 to 1997 and was Vice President MIS of ACSC from
1995 to 1997 until leaving ACSC in an internal corporate reorganization in 1997,
to devote 100% of his time to the Sands.
Karen Raffo, 50, is Vice President Human Resources and Administration
since joining the Sands in March, 1999. Ms. Raffo has been employed in the
casino industry since 1981 in human resources, including positions at Claridge,
Bally's Park Place, Trump Taj Mahal, and American Gaming and Entertainment, and
was Director, Health Plan Administration for Atlanticare Health Plans and
Healthplan Network in South Jersey, before joining the Sands.
The Proponents have no agreement with any of the Debtors' managers
regarding their continued employment by the Reorganized Debtors. However, it is
anticipated by the Proponents that all such persons will remain employed by the
Reorganized Debtors after the Effective Date pursuant to their existing
employment agreements or other arrangements. The costs associated with the
compensation of the Debtors' managers are unaffected by the Committee/High River
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Plan and are reflected in the Debtors' financial projections set forth
in Exhibit D-3 annexed hereto.
When a total of 3.5 million shares of New Common Stock (representing
35% of the total shares to be distributed under the Committee/High River Plan)
have been issued, provided that at least one Creditor entitled to receive New
Common Stock has either been approved by the appropriate regulatory bodies, the
necessity for such approval has been waived, or approval is not required under
applicable law, a meeting of Holders of New Common Stock will be scheduled for
the purpose of electing a Board of Directors of Reorganized Holdings, and the
transaction of such other business as may come before the stockholders at such
meeting. The new Board of Directors will make all determinations regarding the
selection of the Reorganized Debtors' management.
An Entity that is not yet entitled to be issued New Common Stock by
reason of the Regulatory Conditions or otherwise shall have no rights of a
holder of New Common Stock, including right to vote such shares, until all
Regulatory Conditions or other requirements have been satisfied and the New
Common Stock has been issued to the Entity.
5.02 Post Effective Date Control by High River.
After the Effective Date, the consummation of the High River
Investment, and upon the satisfaction of all Regulatory Conditions which pertain
to it, High River will own more than 50% of the issued and outstanding shares of
New Common Stock. As a result, Carl C. Icahn, through his related entities, will
be able to exercise control over the Reorganized Debtors.
ARTICLE VI
ALTERNATIVES TO THE PLAN
The principal alternatives to confirmation of the Committee/High River
Plan are: (a) liquidation of the Debtors under chapter 7 of the Bankruptcy Code,
(b) confirmation of the Debtors' Stand Alone Plan, or (c) confirmation of the
Park Place Plan.
The Proponents adopt and incorporate by reference the Debtors' analysis
of liquidation under chapter 7 as an alternative, which is annexed as an exhibit
to the Master Disclosure Statement. The Proponents believe that the Debtors'
analysis demonstrates that the recovery
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attained by the Creditors in the Committee/High River Plan will exceed the
recoveries by Creditors in a chapter 7 liquidation.
Why The Proponents Believe The High River Plan Is Superior To
The Park Place Plan
A. The Development of the Competing Plans
Although the Park Place Plan is sponsored by Park Place, it is premised
on an agreement that Merrill entered into with Park Place (the "Merrill
Agreement"). The terms of the Merrill Agreement have only recently been
disclosed. Merrill is a significant Holder of the Old Notes who, if it were to
retain its pro rata share of common stock that would have been distributed to
Holders of Old Notes under the Debtors' Stand Alone Plan, would have been
required to submit to certain licensing procedures under the New Jersey Casino
Control Act. The Proponents believe that in order to avoid the need for such
licensing, Merrill solicited Park Place to propose the Park Place Plan pursuant
to which Merrill would be entitled to exchange any new common stock it receives
under the Park Place Plan for debt securities, and thereby be subject to
significantly less oversight by the Casino Commission. In exchange, Park Place,
who was not previously a Creditor of the Debtors, would acquire a controlling
interest in the Reorganized Debtors. Merrill contends that its support of the
Park Place Plan is based on its view that that plan provides greater value to
the Noteholders.
High River, as a significant Holder of Old Notes that supported the
Debtors' Stand Alone Plan, opposes the Park Place Plan. High River believes that
under that plan, Park Place would receive a disproportionately greater share of
the value of the Reorganized Debtors' enterprise at the expense of all other
Holders of Old Notes. High River believes that Merrill is prepared to accept
this less favorable treatment in order to avoid being subject to the licensing
process under the New Jersey Casino Control Act, although Merrill asserts that
its decision is based on comparative recoveries. Regardless, High River believes
that other Holders of Old Notes who do not share Merrill's particular incentives
regarding licensing should not be forced to accept the lesser treatment provided
to Holders of Old Notes under the Park Place Plan. For that reason, after the
Park Place Plan was announced, High River sought to propose its own plan to
preserve more of the Reorganized Debtors' enterprise value for the Holders of
Old Notes. Thereafter, High River and the Committee agreed to submit the
Committee/High River Plan.
B. High River and The Committee Agree To A Plan With Enhanced Value
For Trade Creditors
As a consequence of the deadlock between High River and Park Place the
Committee sent an invitation to each group to negotiate with the Committee. Park
Place rejected this invitation and through its counsel initially indicated that
it would pay no more than a 40% cash equivalent. On the other hand, High River
accepted the invitation to negotiate which resulted in an agreement that
provided for a minimum of a 73% distribution to the unsecured creditors and
which prevented High River from withdrawing the Plan without High River either
supporting a
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competing plan which provided for at least a 73% distribution or High River
making a tender offer at 73% for all of the unsecured claims.
Subsequent to learning of the High River offer, Park Place increased
its offer to the unsecured creditors, first to a 75% distribution, then to a
100% distribution. High River then increased its offer to a maximum amount
permissible by law up to 100%, but in no event less than 80%.
Subsequent to learning of the Committee's agreement with High River,
Park Place and Merrill made a motion to the court to set the agreement aside on
the grounds that there was a breach of fiduciary duty to the unsecured creditors
because the agreement purported to bind the Committee to support the
Committee/High River Plan, even in the face of a superior alternative plan. The
Court set aside the agreement to the extent it purported to bind the Committee
or its members to support the Committee/High River Plan. Because the agreement
was determined not to be binding, the Court rejected the notion that the
Committee or its counsel breached their fiduciary duty. The Court also
recognized the value of the 73% High River tender offer portion of the agreement
and accepted the representation of High River and the Committee that the
agreement was not intended to nor did it obligate any individual creditor (or
Committee member) to vote for the Committee/High River Plan.
C. The Park Place Offer of 100% Recoveries is Illusory
The Proponents believe the Park Place Plan cannot be confirmed because
it unfairly discriminates among Creditors in violation of section 1129(b) of the
Bankruptcy Code. As a consequence, while the Park Place Plan purports to pay 100
cents on the dollar for all allowed trade claims, the Proponents believe that
the offer is totally illusory and purposefully misleading. The Proponents
believe that the Park Place Plan may not legally deliver more than an
approximate 66% dividend to trade creditors. The following discussion is
intended to demonstrate why the Park Place Plan does not comply with the
Bankruptcy Code and, in the opinion of the Proponents, cannot be confirmed in
its present form.
Total Allowed Old Notes Claims are approximately $191.3 million.
Assuming that the secured portion is $110 million (based on the fact that the
Collateral has been appraised at that approximate amount), the unsecured
deficiency portion (the "Old Notes Unsecured Claim") is $81.3 million. The
Proponents believe that, in order not to unfairly discriminate, the Park Place
Plan would have to result in a distribution on account of the Old Note Unsecured
Claim which is substantially equivalent to the distribution to be realized by
holders of general unsecured trade claims.
In the Proponents view, the most appropriate method of valuing the
recoveries to Holders of Old Notes would be to value the New Common Stock based
on the price that Park Place is willing to pay for its 57.7% stake, i.e., $40
million. This reflects what a willing buyer is prepared to pay and is a much
more reliable indication of value than an investment banker's
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prognostication of value predicated on projected future operating performance.
Utilizing this fair market value method, the remaining 42.3% of New Common Stock
to be distributed to Holders of Old Notes under the Park Place Plan is worth
$29.3 million which, when added to the face amount of the New Notes under the
Park Place Plan ($128 million), results in a total recovery of only $157.3
million. Allocating that value to the secured portion of the claims ($110
million) leaves $47.3 million to apply to the $99.8 million in remaining
unsecured claims (the total of the Class 4, Class 5 and Old Notes Unsecured
Claim), and results in a mere 47% recovery on account of the Old Notes Unsecured
Claim (before taking into account the impact of subordination). When compared to
the 100% recovery Park Place proposes to pay Class 4 General Unsecured Claims,
the Park Place plan clearly discriminates against the Old Note Holders and, in
the view of the Proponents, is unconfirmable.
As indicated above, the Proponents believe that an alternative, less
reliable, methodology for valuing recoveries is to employ investment-banking
analysis of projected future operating performance. However, even if one were to
use the valuation methodology favored by Park Place, the result would still be
unfair discrimination that would doom the Park Place Plan. Under this investment
bankers' methodology, and crediting Park Place's overly aggressive projections,
total value distributed to the Holders of Old Notes under the Park Place Plan is
in the range of $177.9 million to $197 million. Allocating that value first to
the secured portion of the Claims ($110 million) leaves $67.9 million to $87
million to be allocated to the unsecured claim amount including the Old Notes
Unsecured Claim and the Intercompany Note Claim. Since the unsecured claims
total $99.8 million, Park Place's distribution of value on account of those
Claims constitutes a recovery ranging from a low of 68% to a high of 87%. By
contrast, Park Place proposes to pay 100% to General Unsecured Claims (Class 4).
The Proponents believe that this difference constitutes unfair discrimination,
which is prohibited by section 1129(b) of the Bankruptcy Code.
Annexed hereto as Exhibit D-6 is an analysis which shows that under the
Park Place Plan the deficiency claims of the Old Noteholders will receive value,
in the form of non- cash securities, which the Proponents believe does not
exceed 66% of said claims based upon an average of the high range of the two
aforementioned methods, while the similarly situated general unsecured creditors
receive 100% of their claims in cash. The Proponents firmly believe that this
disparate treatment is unfairly discriminatory and that the Bankruptcy Court
would, therefore, limit recoveries under the Park Place Plan to approximately
66%.
The Committee/High River Plan estimates trade creditor recoveries at
80% and has been further modified to provide Class 4 Creditors with such higher
recoveries - up to 100% - as would not render the Proponents' plan
unconfirmable. It will be up to the Bankruptcy Court to determine just how high
a dividend either of the competing plans may pay to the trade creditors.
Nevertheless, the Proponents believe that, regardless of which valuation
methodology is ultimately adopted by the Bankruptcy Court, trade creditors would
receive a higher dividend under the Committee/High River Plan than under the
Park Place Plan.
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D. Park Place's Projected Cost Savings Will Come At The Expense Of
Trade Creditors
Park Place argues that its relative size and purchasing power will allow it to
reduce costs through synergies. Park Place already controls three other hotel
casinos in Atlantic City and many of the Sand's trade vendors do business with
Park Place's other properties. The Proponents believe that this projected
"synergistic savings" is merely a euphemism for Park Place's intention to wrest
price concessions from its trade vendors.
E. Park Place Would Realize A Huge Premium Under its Plan
The Proponents believe that the Park Place Plan represents an effort by
Park Place to acquire the Reorganized Debtor at a substantial discount to its
actual value, to the detriment of the remaining Holders of Old Notes. Park Place
proposes to pay $6.93 per share for the New Common Stock ($40 million for 57.7%
of 10 million shares). Yet Park Place's own projections state that the value of
the New Common Stock ranges from no less than $11.76 per share to as much as
$16.26 per share. Thus, even if one were prepared to credit what the Proponents
believe are outrageously aggressive projections, Park Place would be acquiring
the New Common Stock at a discount of at least 42% and as much as 58% from the
value Park Place ascribes to it. See Exhibit D-6. This discount represents value
that otherwise belongs to the Holders of Old Notes but is being appropriated by
Park Place under its plan.
The Park Place Plan also requires those Holders of Old Notes who desire
to participate in the plan's "PPE Exchange Option" to sell their New Common
Stock at an even more egregious discount to the value of the stock. Under that
option, Park Place can acquire each share of the New Common Stock for
approximately $3.61 in New Notes. Compared to Park Place's value of the New
Common Stock in the range of $11.76 to $16.26, Holders of Old Notes who wish to
participate in the PPE Exchange Option will be required to sell their New Common
Stock at a discount of 70% to 78% of the actual value Park Place allegedly
ascribes to it. See Exhibit D-6.
F. The Park Place Plan Has Many Additional Costs
The Proponents also note that under the Park Place Plan, the
Reorganized Debtors will be required to pay all of the expenses incurred by both
Merrill and Park Place during the chapter 11 Cases, including the fees and
expenses of their attorneys, agents, brokers, and financial advisors. Park Place
has, without any details, estimated these expenses at $2 million. In addition,
under the Park Place Plan, the Reorganized Debtors would be required to make
substantial ongoing payments to Park Place in the form of management fees and
overhead allocations estimated to be in excess of $20 million in the first three
years of operations alone.
The Proponents have prepared a comparison of the recoveries to
creditors under the Committee/High River Plan and the Park Place Plan. A copy of
such comparison is attached
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hereto as Exhibit D-7.
G. Park Place Mischaracterizes Icahn's Gaming Results
Park Place grossly mischaracterizes the track record of Mr. Icahn in
the gaming industry in its attempt to argue that the Reorganized Debtors'
financial performance will suffer under the Committee/High River Plan. As a
threshold matter, their comparisons of Mr. Icahn's ownership of the
Stratosphere, which only recently emerged from chapter 11, and is located on the
north end of the Las Vegas Strip with virtually no walk-in customers, to casinos
on the south end of the Las Vegas Strip (including those owned by Park Place)
are meaningless. These new mega resort attractions were each constructed at
costs in excess of $1 billion, as compared to the Stratosphere's valuation when
it emerged from bankruptcy of $120 million. Because of the mega resorts' recent
arrival, they have become "must see" properties generating significant walk-in
customers. Insinuating that the Stratosphere, fresh out of its own debilitating
bankruptcy case, should obtain the same "fair share" as these resorts at their
better and more upscale locations is simply unreasonable. Further, the
Stratosphere is currently undergoing an upgrading of its facilities which, while
depressing operating performance in the near term, is expected to result in
significantly improved performance in the years ahead. For example, during 1999
the Stratosphere constructed a new race and sports book, deli, bar, and lounge,
and an escalator from the second floor showroom to the first floor casino. This
construction resulted in a decline in revenues, traceable to a reduction in the
number of slot machines. Yet Stratosphere was able to limit the cash flow impact
of lost revenues by controlling costs: although revenues declined $6.8 million
for the twelve months ended September 26, 1999, as compared to the same period
in 1998, EBITDA only declined $3.7 million.
The Sands Casino Hotel is more properly compared to an operation like
Mr. Icahn's Arizona Charlie's. There, after acquiring the Las Vegas, Nevada
casino under a chapter 11 plan of reorganization and obtaining control in late
September, 1998, Mr. Icahn's management team implemented a profit enhancement
program that included casino and food and beverage product enhancements and the
implementation of a cost reduction plan. The result of the profit enhancement
program was an 8.5% increase in revenues, a 7.6% reduction in operating
expenses, and a 123% increase in EBITDA. Currently, the twelve-month trailing
EBITDA is in excess of $14.3 million. Prior to Mr. Icahn's management, the
twelve-month trailing EBITDA was only $6.2 million.
As disclosed elsewhere in this Disclosure Supplement, High River holds
approximately $34 million (approximately 40%) of certain bonds of Claridge at
Park Place, Inc. ("Claridge"), which is currently subject to a chapter 11 case
under the Bankruptcy Code. Recently, the debtors in possession in those cases
proposed a plan of reorganization that would transfer ownership of the
reorganized entity to the holders of the bonds. If that plan is confirmed and
becomes effective, Mr. Icahn could become a controlling shareholder of Claridge.
There can be no assurances that the plan will be confirmed and become effective.
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Merrill and Park Place have alleged that Mr. Icahn holds impermissible conflicts
of interest between his holdings of Old Notes in the Debtors' cases and his
Claridge bonds, suggesting that Mr. Icahn has exercised undue influence in the
Claridge case at the expense of the Debtors regarding a transaction between the
Claridge and the Debtors for the purchase of certain of Claridge's real property
(the "Improvements Agreement"). The Proponents believe that these allegations
are baseless. Mr. Icahn was informed of the Improvements Agreements after the
fact, and played no role whatsoever - on behalf of either the Debtors or
Claridge - in its negotiation or documentation. The Improvements Agreement
obtained court approval in each of the Debtors' and the Claridge's chapter 11
cases.
H. Park Place Struggled For Years After Its Management Change
While Park Place unfairly focuses its attention on the Stratosphere and
its one year of results following its emergence from bankruptcy in an
environment of massive competition from brand new mega resorts, the fact of the
matter is that it took years for Park Place's current management to turn its
operations around. Following the 1990 management changes at Park Place's
predecessor, Bally's Manufacturing, the enterprise had four straight years of
negative net income, four years of negative return on assets, four years of
negative return on equity, and four years of negative returns on invested
capital.
I. In the Proponents' View, Park Place's Projections Are Unreasonably
Optimistic
Park Place not only attempts to reject the most reliable valuation
methodology which focuses on what Park Place is willing to pay, it then relies
on a set of future projections that appear totally unreasonable. For example,
Park Place projects that its year 2000 earnings on a gross operating profit
basis or EBITDAMF, measured as a percentage of its total assets, will be
approximately 22%, a figure which is double that reported by the Sands for 1999,
double what the Atlantic City Hilton reported for 1999 (another Park Place
property), and 70% better than the industry average for that year.
Park Place also projects slot win per unit per day at 10% over the
industry average, a prediction, which if true, would catapult Sands into the
rank of the 3rd highest casino in slot win per unit per day in all of Atlantic
City. Sand's current management has advised the Proponents that it believes that
Park Place's projections are unreasonable in these and other regards. As just
one indication of the risks associated with Park Place's aggressive projections,
if one were to assume that Park Place's new management could not institute
improvements that would bring Sand's slot operations beyond industry averages, a
full $20 million in projected earnings would be lost. At the confirmation
hearing, the Proponents will present expert testimony regarding the substantial
risks associated with Park Place's aggressive projections.
J. Conclusion
For the foregoing reasons, the Proponents believe that the
Committee/High River Plan is far superior to the Park Place Plan as well as the
Debtors' Stand Alone Plan because it (a)
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provides a significantly higher and better recovery to the Holders of Old Notes
(in this regard it should be emphasized that the Proponents' valuations are
based on actual capital infusions proposed by the two competing plan sponsors
while Park Place is forced to rely on its hypothetical, highly questionable
projections that lack historical basis in fact), (b) provides for an equity
infusion of $65 million by High River, compared to Park Place's proposal to
invest only $40 million, (c) does not obligate the Reorganized Debtors to make
substantial payments to Park Place under a management agreement, or share in the
costs of Park Place's general corporate overhead, (d) gives the Reorganized
Debtors a stronger capital structure with less leverage (See Exhibit D-7) in
order to meet their obligations under the New Notes, (e) provides the
Reorganized Debtors with more resources to address the anticipated increased
competition in the Atlantic City market, and (f) retains the competitive
environment in the industry for the benefit of trade suppliers.
ACCORDINGLY, THE PROPONENTS RECOMMEND THAT CREDITORS VOTE TO ACCEPT THE
COMMITTEE/HIGH RIVER PLAN AND REJECT THE PARK PLACE PLAN OR, IF VOTING TO ACCEPT
BOTH PLANS, INDICATE A PREFERENCE FOR THE COMMITTEE/HIGH RIVER PLAN.
ARTICLE VII
VOTING REQUIREMENTS
7.01. Parties In Interest Entitled to Vote.
Pursuant to the Bankruptcy Code, only Classes of Claims and Interests
that are "impaired" (as defined in section 1124 of the Bankruptcy Code) under
the Committee/High River Plan are entitled to vote to accept or reject the
Committee/High River Plan. A Class is impaired if the legal, equitable, or
contractual rights of the Holders are modified, other than by curing defaults
and reinstating the debt. Classes of Claims and Interests that are not impaired
are not entitled to vote on the Committee/High River Plan and are conclusively
presumed to have accepted the Committee/High River Plan. The votes of classes of
Claims and Interests that receive no distribution under the Committee/High River
Plan are not solicited because they are deemed to have rejected the
Committee/High River Plan.
Only those holding Allowed Claims may vote. Pursuant to section 502 of
the Bankruptcy Code and Bankruptcy Rule 3018, the Bankruptcy Court may estimate
and temporarily allow a Claim for the purpose of voting on the Committee/High
River Plan.
Class 1 is unimpaired under the Committee/High River Plan, and,
therefore, is conclusively presumed to accept the Committee/High River Plan
pursuant to section 1126(f) of the Bankruptcy Code. Holders of Class 1 Claims do
not have a right to vote on the Committee/High River Plan.
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The following Classes of Claims and Interests are impaired under the
Committee/High River Plan:
Classes 2 through 7 are impaired under the Committee/High River Plan
(with the possible exception of Class 3, depending on the treatment ultimately
selected by the Proponents). Each Holder of an Allowed Claim in Classes 2
through 4, including Holders of Allowed Class 3 Claims, are entitled to vote to
accept or reject the Committee/High River Plan. However, in the event that the
Proponents elect not to impair Class 3 Claims, the Proponents reserve the right
to have Class 3 presumed to have accepted the Committee/High River Plan pursuant
to section 1126(f) of the Bankruptcy Code, notwithstanding the actual votes of
the Holders of such claims. The Old Notes Trustee does not vote any Claim with
respect to the Old Notes.
Classes 5, 6, and 7 are impaired under the Committee/High River Plan
but will receive no distribution and retain no property under the Committee/High
River Plan, so are deemed to have rejected the Committee/High River Plan
pursuant to section 1126(g) of the Bankruptcy Code and their votes are not
solicited.
7.02. Record Date.
The date of the approval of the Disclosure Statement will be considered
the Record Date for voting on the Committee/High River Plan. Entities holding
Claims transferred after such date will not be permitted to vote to accept or
reject the Committee/High River Plan.
7.03. Voting Procedures
Voting on the Committee/High River Plan by each Holder of an impaired
Claim entitled to vote is important. Please follow the directions contained in
the Voting Procedures Order and on the enclosed ballot carefully. Facsimile
ballots will not be accepted. To be counted, your ballot must be received by
LOGAN & COMPANY, INC., 546 VALLEY ROAD, UPPER MONTCLAIR, NEW JERSEY, 07043, BY
NO LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON __________, 2000, unless
otherwise provided in the Voting Procedures Order. It is of the utmost
importance that you vote promptly to accept the Committee/High River Plan and
that you indicate your preference for the Committee/High River Plan over all
others
ARTICLE VIII
REQUIREMENTS FOR CONFIRMATION OF THE
COMMITTEE/HIGH RIVER PLAN
The Bankruptcy Code requires that, to confirm a chapter 11 plan, the
bankruptcy court must make a series of findings concerning the plan and its
proponents, including that (a) the plan has classified claims and interests in a
permissible manner, (b) the plan complies with applicable provisions of the
Bankruptcy Code, (c) the proponents have complied with applicable provisions of
the Bankruptcy Code, (d) the proponents have proposed the plan in good faith and
not by any
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means forbidden by law, and (e) the disclosure required to be made by section
1125 of the Bankruptcy Code has in fact been made.
The Bankruptcy Code also requires that (a) a chapter 11 plan be
accepted by the requisite votes of creditors (except to the extent that
"cramdown" is available under section 1129(b) of the Bankruptcy Code as
discussed below), (b) a plan be in the "best interests" of all holders of claims
or interests in an impaired class (that is, that each creditor and equity
security holder will receive at least as much pursuant to the plan as it would
receive in a chapter 7 liquidation), (c) the plan is feasible, and (d) if the
plan is to be confirmed without the acceptance of all impaired creditors, that
the plan does not discriminate unfairly and is fair and equitable.
The Proponents believe that all of these conditions will have been met
by the date of the Confirmation Hearing and will seek rulings of the Bankruptcy
Court to such effect at the hearing.
8.01. Acceptance of the Committee/High River Plan
As a condition to confirmation of the Committee/High River Plan, the
Bankruptcy Code requires that each Class of impaired Claims or Interests vote to
accept the Committee/High River Plan, except under a "cramdown" scenario
discussed below, where acceptance is required by only one impaired class. A plan
is accepted by an impaired class of claims if holders of at least two-thirds of
the dollar amount and more than one-half of the number of claims of that class
vote to accept the plan. Only those holders of claims who actually vote are
counted in these tabulations. Holders of claims who fail to vote are not counted
as either accepting or rejecting.
8.02 The Best Interests Test
Notwithstanding the acceptance of the Committee/High River Plan by
Creditors, in order to confirm the Committee/High River Plan the Bankruptcy
Court must independently determine that the Committee/High River Plan is in the
best interests of all Classes of Creditors and Holder of Interests. This "best
interests test" requires that the Bankruptcy Court find that the Committee/High
River Plan provides to each member of each impaired Class of Claims and
Interests a recovery which has a present value at least equal to the present
value of the distribution which each such person would receive from the Debtors
if the Debtors were instead liquidated under chapter 7 of the Bankruptcy Code.
To calculate the amount which members of each impaired Class of Claims
and Interests would receive if the Debtors were to be liquidated under chapter
7, the Bankruptcy Court must first determine the aggregate dollar amount that
would be generated from the liquidation of the Debtors (the "Liquidation Fund").
The Liquidation Fund would consist of the proceeds from the disposition of the
assets of the Debtors plus the amount of any cash held by the Debtors. The
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Liquidation Fund would then be reduced by the costs of the liquidation. Such
costs would likely include the fees of a trustee, as well as those of counsel
and other professionals that might be retained by such trustee; selling
expenses; any unpaid expenses incurred by the Debtors during their chapter 11
cases (such as fees for attorneys, financial advisors, and accountants) which
are allowed in the chapter 7 proceeding; and Claims arising by reason of the
trustee's rejection of obligations incurred by such Debtors during the pendency
of the chapter 11 Cases. These Claims, and such other Claims as might arise in
the liquidation or result from the Debtors' chapter 11 Cases, would be paid in
full out of the Liquidation Fund before the balance of a Liquidation Fund would
be made available to pay unsecured Claims. The present value of the aggregate
hypothetical distributions out of the Liquidation Fund (after subtracting the
amounts described above) are then compared with the present value of the
property offered to each of the Classes of Claims and Interests under the
Committee/High River Plan to determine if the Committee/High River Plan is in
the best interests of each Creditor and shareholder.
The Debtors' liquidation analysis is annexed as an exhibit to the
Second Amended Master Disclosure Statement, and the conclusions of this analysis
with respect to impaired Classes of Claims and Interests have been summarized
therein. The Debtors' analysis is dependent in part on certain assumptions as to
the effect of liquidation on the Debtors' property.
Based on the Debtors' liquidation analysis, the Proponents have
concluded that a liquidation of the Debtors would result in lower distributions
to Creditors compared to distributions proposed under the Committee/High River
Plan. Accordingly, the Proponents believe, after analyzing the alternatives and
consulting with their appropriate advisors, that the Committee/High River Plan
satisfies the "best interest test."
8.03. Feasibility
Section 1129(a)(11) of the Bankruptcy Code contains the "feasibility"
requirement, that the Debtors be able to perform their obligations under the
Committee/High River Plan and that its confirmation is not likely to be followed
by the liquidation, or the need for further financial reorganization, of the
Debtors.
Pursuant to the Committee/High River Plan, all Claims against the
Debtors shall be discharged and released in full on the Effective Date, and all
Creditors shall be precluded from asserting against the Reorganized Debtors and
their assets any other or further Claim based upon any act or omission,
transaction, or other activity of any kind or nature that occurred prior to the
Confirmation Date. On the Effective Date of the Committee/High River Plan, all
rights of holders of Claims or Interests of all Classes under the Committee/High
River Plan shall be limited solely to the right to receive the distributions set
forth in the Committee/High River Plan, and the holders of such Claims or
Interests shall have no further rights against the Debtors, the Reorganized
Debtors, or the Estates by virtue of such Claims or Interests. The only funded
indebtedness of the Reorganized Debtors will be the $110 million of New Notes; a
substantial portion of the Debtors' pre-bankruptcy indebtedness will be
converted to equity on the Effective Date. Feasibility of the Committee/High
River Plan is further enhanced by the fact that High
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River will be making a substantial investment of $65 million in new funds to be
available to the Reorganized Debtors.
The Proponents believe that the Committee/High River Plan easily
satisfies the feasibility requirement. Annexed hereto as Exhibit D-3 are the
Debtors' projections of future performance based on the assumptions set forth in
the Global Development Plan 2000 - 2002. While the Proponents have not
independently verified such projections and assumptions, the Proponents have
reviewed them and believe that they are reasonable. Those projections and
assumptions indicate that the Reorganized Debtors will not have any difficulty
performing their obligations under the Committee/High River Plan, and will not
require further financial reorganization.
8.04. Confirmation Without Acceptance of All Impaired Classes
The Bankruptcy Code contains provisions that allow confirmation of the
Committee/High River Plan even if the Committee/High River Plan is not accepted
by all impaired Classes, as long as at least one impaired Class of Claims has
voted to accept. These so-called "cramdown" provisions are set forth in section
1129(b) of the Bankruptcy Code. A plan may be confirmed under the cramdown
provisions if, in addition to satisfying all remaining requirements of section
1129(a) of the Bankruptcy Code, it (a) "does not discriminate unfairly" and (b)
is "fair and equitable," with respect to each Class of Claims or interests that
is impaired under, and has not accepted, the plan. As used by the Bankruptcy
Code, the phrases "discriminate unfairly" and "fair and equitable" have specific
meanings unique to bankruptcy law.
The requirement that a plan not "discriminate unfairly" means, among
other things, that a dissenting impaired class must be treated substantially
similarly compared to other classes of claims or interests with substantially
similar legal entitlements.
In general, the "fair and equitable" standard requires that an impaired
dissenting class receive full compensation for its allowed claims or interests
before any junior class receives any distribution. More specifically, section
1129(b)(2) of the Bankruptcy Code provides that a plan can be confirmed if: (a)
with respect to an impaired dissenting class of unsecured claims, either (i)
each creditor in such class receives property of a value equal to the amount of
its allowed claim, or (ii) the holders of claims that are junior to the claims
of the dissenting class do not receive any property under the plan; (b) with
respect to an impaired dissenting class of secured claims, the holders of such
secured claims either (i) retain their liens and receive deferred cash payments
with a value as of the plan's effective date equal to the value of their
collateral or (ii) otherwise receive the indubitable equivalent of their secured
claims; and (c) with respect to a dissenting class of interests, either (i) each
holder of an interest of such class receives or retains on account of such
interest property of a value, equal to the greater of the allowed amount of any
fixed liquidation preference to which such holder is entitled, any fixed
redemption price to which such holder is entitled or the value of such interest,
or (ii) the holder of any interest that is junior to the interest of such class
does not receive or retain any property on account of such junior interest. The
"fair and equitable" standard has also been interpreted to prohibit any class
senior
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to a dissenting class from receiving more than 100% of its allowed claims prior
to the payment in full of all junior claims.
Because they are retaining no distributions under the Committee/High
River Plan, Classes 5, 6, and 7 are deemed to have rejected the Committee/High
River Plan. Therefore, the Proponents intend to confirm the Committee/High River
Plan as to Classes 5, 6, and 7 under the cramdown provisions of section 1129(b)
of the Bankruptcy Code. In the event that any other Classes are determined to
have rejected the Committee/High River Plan, the Proponents may also seek to
confirm the Committee/High River Plan as to any such Classes by utilizing the
cramdown provisions of section 1129(b) of the Bankruptcy Code. Alternatively,
the Proponents may modify or revoke the Committee/High River Plan in accordance
with Section 12.04 of the Committee/High River Plan.
The Proponents believe that the Committee/High River Plan complies with
the requirements for cramdown pursuant to section 1129(b) of the Bankruptcy
Code.
ARTICLE IX
FEDERAL TAX CONSEQUENCES
The following discussion of federal income tax consequences is based on
the Internal Revenue Code, the Treasury Regulations promulgated and proposed
thereunder (the "Regulations"), judicial decisions and published administrative
rulings and pronouncements of the Internal Revenue Service as in effect on the
date hereof. Legislative, judicial or administrative changes or interpretations
enacted or promulgated in the future could alter or modify the analyses and
conclusions set forth below. Any such changes or interpretations may be
retroactive, and could significantly affect the federal income tax consequences
discussed below.
THE PROPONENTS REFER ALL CREDITORS AND OTHER PARTIES-IN-INTEREST TO THE
MASTER DISCLOSURE STATEMENT, ARTICLE V "FEDERAL TAX CONSEQUENCES," FOR A MORE
GENERAL DISCUSSION OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE DEBTORS OF THE
COMMITTEE/HIGH RIVER PLAN.
9.01 Federal Income Tax Consequence to the Debtors.
Reduction of Debtors' Indebtedness Under Committee/High River Plan. The
principle amount of the Debtors' aggregate outstanding indebtedness will be
substantially reduced under the Committee/High River Plan. Generally, the
cancellation or other discharge or indebtedness triggers ordinary income to a
debtor equal to the principal amount and accrued interest thereon
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(as determined for federal income tax purposes) or the indebtedness forgiven. If
debt is canceled or discharged in a case under the Bankruptcy Code, however, no
ordinary income to the debtor generally results. Instead, certain tax attributes
otherwise available to the debtor are reduced, in most cases by an amount equal
to the amount of the indebtedness forgiven. Tax attributes subject to reduction
include (a) NOLs and NOL carryovers; (b) most tax credit carryovers; (c) capital
losses and capital loss carryovers; (d) the tax basis of the debtor's
depreciable and non-depreciable assets, but generally not in an amount greater
than the excess of the aggregated tax bases of the property held by the debtor
immediately after the cancellation of indebtedness over the aggregate of the
debtor's liabilities immediately after the cancellation of indebtedness; (e)
passive activity loss and credit carryovers; and (f) foreign tax credit
carryovers. Attribute reduction is calculated only after the tax for the year of
discharge has been determined. Attached as Exhibit D-4 is a pro forma Tax
Attribute Reduction Schedule and a pro forma Effective Date Balance Sheet which
includes the anticipated tax attribute reductions called for by the debt relief
contemplated by the Committee/High River Plan.
9.02. Federal Income Tax Consequences to Holders of Claims and
Interests.
(a) Holders of Claims - Generally. The tax consequences of the
Committee/High River Plan to a Holder of a Claim will depend, in part, on
whether the Claim constitutes a "security" under tax laws, the type of
consideration received in exchange for the Claim, whether the Holder is a
resident of the United States for tax purposes, whether the Holder reports
income on the accrual or cash basis method, and whether the Holder receives
distributions under the Committee/High River Plan in more than one taxable year.
Holders of Claims are strongly advised to consult their tax advisors with
respect to the tax treatment of their particular Claims under the Committee/High
River Plan.
(b) Holders of Class 2 Claims. Under the Committee/High River
Plan, Holders of Class 2 Claims will exchange Old Notes in return for a package
of Plan Securities consisting of New Notes issued by Reorganized Funding and New
Common Stock of Reorganized Holdings. The tax consequences resulting from this
exchange depend, in large part, on whether the Old Notes, the New Notes, or both
are "securities" under the tax law. The term "securities" is not defined in the
IRC or the Regulations and it has not been clearly defined by the courts. One of
the most significant factors in determining whether a particular debt instrument
is a security is its original term. In general, the longer the term of the
instrument, the greater the likelihood that it will be considered a security.
Although additional facts and circumstances are relevant, a term of 10 years or
more is usually sufficient for a debt instrument to be considered a security.
(i) "Recapitalization" Treatment
If the Old Notes are "securities" for tax law purposes, the
exchange will probably be treated as a recapitalization under IRC ss.
368(a)(1)(E) provided that either the New Notes or
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the New Common Stock of Holdings do not constitute "boot" under IRC ss. 354.
Boot includes cash, debt instruments which are not securities of Funding, and
stock of a corporation that is not a party to the recapitalization.
As a recapitalization, if neither the New Notes nor the New
Common Stock of Holdings constitute boot, the holder will not recognize gain or
loss (subject to IRC ss. 354(a)(2)(B) discussed below). The tax basis of the New
Notes and New Common Stock of Holdings received by each holder will equal the
holder's adjusted tax basis in the Old Notes surrendered. This adjusted tax
basis is allocated between the New Notes and New Common Stock of Holdings
received by each Holder in proportion to each asset's respective fair market
value. Each Holder's holding period in the New Notes and New Common Stock of
Reorganized Holdings will include the Holder's holding period in the Old Notes
surrendered, provided that such Old Notes were held by the Holder as a capital
asset on the date of the exchange.
If either the New Notes or the New Common Stock of Reorganized
Holdings is boot, a Holder will recognize gain realized, if any, on the exchange
to the extent of the fair market value of the boot received. Loss realized by a
Holder on the exchange is not permitted to be recognized by virtue of the
existence of boot. Provided that the Old Notes are capital assets in the hands
of the Holders, any gain recognized will constitute capital gain unless the
exchange has, under IRC ss. 356(a)(2), the effect of the distribution of a
dividend. In such a case, the amount of gain recognized that is not in excess of
the Holder's ratable share of undistributed earnings and profits of Funding, if
any, will be treated as a dividend (and hence, ordinary income). Furthermore,
the Holder's basis in the Old Notes will carry over to the non-boot property
received and will be increased by the gain recognized on the exchange, and
decreased by the fair market value of the boot received in the exchange. The
Holder will take a fair market value basis in the boot received.
Notwithstanding the aforementioned analysis, under IRC ss.
354(a)(2)(B), a Holder will recognize ordinary income to the extent that the
property received by a Holder is attributable to interest (including original
issue discount) which has accrued on the Old Notes during the Holder's holding
period and which the Holder has not previously included in income. Similarly, to
the extent that interest is not paid in the exchange, the Holder that previously
included accrued interest into income may recognize an ordinary loss.
(ii) Sale or Exchange Treatment Under IRC Section 1001
If the Old Notes are not securities or the New Notes and the
New Common Stock both constitute boot, the exchange will not qualify as a
recapitalization under IRC ss. 368(a)(1)(E). Instead, the exchange will be
treated as a taxable exchange under IRC ss. 1001 and each Holder will recognize
gain or loss equal to the difference between the fair market value of the
property received (New Notes and New Common Stock) and the Holder's adjusted tax
basis in the Old Notes surrendered. Provided that the Old Notes are capital
assets in the hands of a Holder, any gain or loss recognized will be capital
gain or loss. Ordinary income may be recognized if a
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portion of the property received is treated as a payment of interest. Each
Holder's tax basis in the New Notes and New Common Stock received will be the
fair market value of each on the date of the exchange. The holding period in the
New Notes and New Common Stock will not include the holding period in the Old
Notes surrendered.
(c) Holders of Interests. Holders of Interests should
generally recognize a loss on their Common Stock to the extent of their tax
basis therein. Holders of Interests are strongly advised to consult their tax
advisors with respect to the tax treatment of their particular Interests under
the Committee/High River Plan.
(d) Certain Other Tax Consequences for Holders of Other Claims
and Interests. A Holder of another Claim or Interest who under the
Committee/High River Plan receives in respect of its Claim or Interest an amount
that is less than the Holder's tax basis in such Claim or Interest may be
entitled, in the year of a receipt or in an earlier year, to a bad debt
deduction under IRC ss. 166(a), or a worthless securities deduction under IRC
ss. 165(g). A Holder of a Claim otherwise satisfying the requirements for a bad
debt deduction pursuant to IRC ss. 166(a) will be entitled to a bad debt
deduction with respect to such Claim only if (i) such Holder is a corporation,
or (ii) such Claim constituted a debt created or acquired (as the case may be)
in connection with a trade or business of such Holder or a debt the loss from
the worthlessness of which is incurred in such Holder's trade or business. A
Holder of a Claim that has previously recognized a loss or deduction in respect
of its Claim may be required to include in its gross income (as ordinary income)
any amounts received under the Committee/High River Plan to the extent such
amounts exceed the Holder's adjusted basis in such Claim.
9.03 Importance of Obtaining Professional Tax Assistance
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN, AND IS NOT A SUBSTITUTE FOR CAREFUL
TAX PLANNING WITH A TAX PROFESSIONAL. THE ABOVE DISCUSSION IS FOR INFORMATION
PURPOSES ONLY AND IS NOT TAX ADVICE. THE TAX CONSEQUENCES RELATING TO THE PLAN
ARE IN MANY CASES UNCERTAIN AND MAY VARY DEPENDING ON A HOLDER'S INDIVIDUAL
CIRCUMSTANCES. ACCORDINGLY, HOLDERS ARE URGED TO CONSULT WITH THEIR TAX ADVISORS
ABOUT THE FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES
OF THE PLAN.
ARTICLE X
CERTAIN FACTORS TO BE CONSIDERED
There are numerous factors to be considered by Creditors in
determining whether to
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accept or reject the Committee/High River Plan, including the following:
10.01. Variances from Projections
A premise of the Committee/High River Plan is the implementation and
realization of the Reorganized Debtors' business plan, achievements of
projections of operations related thereto, and the accuracy of the assumptions
underlying such projections. Many of the assumptions are beyond the control of
the Reorganized Debtors and may not materialize. While the Proponents believe
the assumptions are reasonable, unanticipated events and circumstances occurring
after preparation of the projections may affect the financial results of the
Reorganized Debtors. THE PROPONENTS HAVE RELIED UPON CERTAIN ASSUMPTIONS AND
PROJECTIONS MADE BY THE DEBTORS, AND THE PROPONENTS MAKE NO REPRESENTATION ABOUT
THE ACCURACY OF SUCH ASSUMPTIONS OR PROJECTIONS OR ANY STATEMENTS BASED THEREON.
THE PROPONENTS HAVE EXAMINED THE ASSUMPTIONS AND PROJECTIONS AND BELIEVE THEY
ARE REASONABLE. HOWEVER, THE PROPONENTS HAVE NOT INDEPENDENTLY VERIFIED SUCH
ASSUMPTIONS OR PROJECTIONS.
10.02. Registration and Listing of Plan Securities
There is the potential of an adverse impact on the value of the Plan
Securities should the Reorganized Debtors fail or be unable to register or list
them. In the event the Plan Securities are not registered or accepted for
listing on a national securities exchange, the Proponents anticipate that the
principal effect would relate to the development of a recognized trading market
for such securities. Moreover, there has been no prior market for the Plan
Securities, and there can be no assurance that a public market for the Plan
Securities will develop or be sustained after the Effective Date. To be listed
on and to have such listing continue on a national securities exchange after the
Effective Date, the Reorganized Debtors must satisfy certain initial and
maintenance criteria. The failure to meet these initial and maintenance criteria
in the future may result in the Plan Securities not being eligible for
quotations on national securities exchange; trading, if any, of the Plan
Securities may thereafter be conducted over-the-counter. Equity securities would
likely be traded on the OTC Bulletin Board. The OTC Bulletin Board is an NASD
sponsored and operated inter-dealer automated quotation system for equity
securities not included in a national securities exchange system. The OTC
Bulletin Board was introduced as an alternative to "pink sheet" trading of
over-the-counter securities. There is no bulletin board exchange for unlisted
debt securities, which are traded on an ad hoc basis. Consequently, the
liquidity and stock price of the Plan Securities in the secondary market may be
adversely affected.
There is no assurance that a regular trading market will develop for
any of the Plan Securities or that, if developed, any such market will be
sustained. As a result of such ineligibility for quotations, an investor may
find it more difficult to dispose of, or obtain accurate quotations as to the
market value of the Plan Securities. In the absence of an active trading market,
holders of the Plan Securities may experience substantial difficulty in selling
their securities. The trading
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price of the Plan Securities is expected to be subject to significant
fluctuations in response to variations in quarterly operating results, changes
in analysts' earnings estimates, announcements of business innovations by the
Reorganized Debtors or their competitors, general conditions in the gaming
industry and other factors. In addition, the stock market is subject to price
and volume fluctuations that affect the market prices for companies and that are
often unrelated to operating performance. Whether or not the Plan Securities are
listed on a national securities exchange, the Proponents expect that in order
for a trading market to develop, and in order for trading to occur, market
makers will be required to trade the Plan Securities. To date, there have not
been any discussions or understandings between the Proponents or the Debtors and
any potential market makers regarding the participation of such market makers in
the future trading market, if any, for the Plan Securities.
10.03. Recovery on New Common Stock
A significant part of the recovery to Holders of Old Notes will take
the form of New Common Stock. The Proponents do not anticipate paying dividends
on New Common Stock. There can be no assurance that the New Common Stock will
trade at a per share price within the range of reorganization values set forth
in this Disclosure Statement, that a public market for the Plan Securities will
ever develop or be sustained after the Effective Date, or if developed, that it
would be sustained.
10.04 Recovery On Class 4 Claims
Creditors holding Allowed General Unsecured Claims will receive a pro
rata share of Cash in an amount of $5,360,000 (the "Unsecured Creditors Fund"),
or such higher amount, up to 100% of the estimated total Allowed amount of such
claims, as may be determined to be consistent with Section 1129(b) of the
Bankruptcy Code. Such Claims are estimated by the Proponents to be in a range of
$6,500,000 to $6,900,000. Utilizing the midpoint of this range ($6,700,000),
recoveries by Class 4 Creditors are estimated to be 80%. If, however, actual
total Allowed Class 4 Claims are greater or lesser than the midpoint, actual
recoveries will be less, or more, accordingly.
The Committee/High River Plan provides that the Reorganized Debtors
will pay the expenses of the Unsecured Creditors Fund Administrator as are
allowed by the Bankruptcy Court, up to $200,000. Based on information supplied
by the Debtors, the Proponents do not believe that allowed expenses of the
Unsecured Creditors Fund Administrator will exceed $200,000. If, however, such
allowed expenses exceed $200,000, they will be paid from the Unsecured Creditors
Fund and will reduce the amounts available to pay Allowed Class 4 Claims.
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10.05 Risk of Delay or Non-Occurrence of the Confirmation Date and
the Effective Date
The Plan can only be confirmed if it complies with various legal requirements
set forth in the Bankruptcy Code. Moreover, the occurrence of the Effective Date
is subject to various conditions set forth in the Committee/High River Plan that
must be satisfied or, in some instances, waived prior to the occurrence of the
Effective Date. There may be delay in satisfying these conditions, and there is
no assurance that these conditions will be met (or, as applicable, waived).
10.06 Regulatory Issues
The Casino Commission must approve the Committee/High River Plan and the
securities to be distributed pursuant to the Committee/High River Plan. There
can be no assurance that such approval will be forthcoming. Further, the
Reorganized Debtors' business is subject to pervasive regulation, including
periodic review of the status of the Reorganized Debtors' compliance with
applicable licensing conditions. The regulations are regularly amended and
regulations which may be enacted in the future could have a significant impact
on the Reorganized Debtors' operations and financial performance.
10.07 Competition in Atlantic City Casino Industry
There is significant competition facing the Reorganized Debtors from existing
operators in the Atlantic City market. In addition, there have been
announcements of new entrants to the Atlantic City casino market which, if they
materialize, could have an adverse impact on the financial results of the
Reorganized Debtors.
10.08 Significant Holders
Pursuant to the Committee/High River Plan, High River will be in a position to
control the outcome of actions requiring shareholder approval. This
concentration of ownership could impact the value of the New Common Stock.
Further, if one or more Holders of a significant amount of New Common Stock were
to determine to sell their shares in a short period of time, that may adversely
affect the market price of the New Common Stock.
10.09 Trademarks.
The Proponents have reached an agreement in principle with Las Vegas
Sands, Inc., the Owner of the "Sands" trademark concerning the Reorganized
Debtors' right to continue to use the "Sands" trademark if the Committee/High
River Plan becomes effective. The agreement in principle confirms the rights
which the Debtor believes it has under existing agreement except that the
agreement may not be terminated for a period of 10 years and thereafter any
termination
47
<PAGE>
will result in a termination fee equal to one year of payments. That agreement
remains subject to documentation and there can be no assurances that it will be
consummated. Under the Committee/High River Plan, all executory contracts that
exist between the Debtors and any Entity concerning or relating to the Debtors'
rights in the Sands Trademark will be assumed by the Reorganized Debtors, to the
extent such agreements are susceptible of assumption pursuant to section 365 of
the Bankruptcy Code. Thus, the Proponents believe that the Reorganized Debtors
will be entitled to continue to utilize that trademark in the conduct of their
business operations, but there can be no assurances of same.
48
<PAGE>
ARTICLE XI
RECOMMENDATION
THE COMMITTEE AND HIGH RIVER STRONGLY RECOMMEND THAT ALL CREDITORS RECEIVING A
BALLOT VOTE IN FAVOR OF THE COMMITTEE/HIGH RIVER PLAN, AND VOTE TO REJECT THE
PARK PLACE PLAN OR, IF VOTING TO ACCEPT BOTH PLANS, TO INDICATE A PREFERENCE FOR
THE COMMITTEE/HIGH RIVER PLAN.
TO BE COUNTED, BALLOTS MUST BE RETURNED SO THAT THEY WILL BE RECEIVED
NO LATER THAN 5:00 P.M., EASTERN STANDARD TIME, ON JUNE 5, 2000.
Dated: April 7, 2000
CYPRUS LLC
By: _________________
Name:
Title:
LARCH LLC
By: _________________
Name:
Title:
OFFICIAL COMMITTEE OF UNSECURED CREDITORS
By Cooper Perskie April Niedelman
Wagenheim & Levenson
By: ____________________________
Eric A. Browndorf
49
<PAGE>
EXHIBIT D-1
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW JERSEY
---------------------------------------
In re:
GREATE BAY HOTEL AND CASINO, INC., Case No. 98-10001 (JW), et seq.
a New Jersey Corporation, GB (Jointly Administered) -- ---
HOLDINGS, INC., a Delaware Corporation,
and GB PROPERTY FUNDING CORP., a
Delaware Corporation, Chapter 11
Debtors.
----------------------------------------
FIFTH AMENDED JOINT PLAN OF REORGANIZATION UNDER
CHAPTER 11 OF THE BANKRUPTCY CODE PROPOSED BY THE
OFFICIAL COMMITTEE OF UNSECURED CREDITORS AND HIGH RIVER
COOPER PERSKIE APRIL NIEDELMAN
WAGENHEIM & LEVENSON
1125 Atlantic Avenue
Atlantic City, NJ 08041
(609) 344-3161
Eric A. Browndorf (EB-5610)
Attorneys for the Official Committee
Of Unsecured Creditors
BERLACK, ISRAELS & LIBERMAN LLP
120 West 45th Street
New York, New York 10036
(212) 704-0100
Edward S. Weisfelner (ESW-5581)
Attorneys for High River, Cyprus LLC,
and Larch LLC
<PAGE>
<TABLE>
<S> <C> <C>
TABLE OF CONTENTS
Page(s)
ARTICLE 1 DEFINITIONS........................................................................................... 1
ARTICLE 2 ADMINISTRATIVE AND PRIORITY TAX CLAIMS................................................................ 9
2.01 Administrative Expense Claims .....................................................................9
2.02 Priority Tax Claims ..............................................................................10
2.03 Old Note Trustee Fees and Expenses............................................................... 10
2.04 Unsecured Creditors Fund Expenses .................................................................10
ARTICLE 3 CLASSIFICATION OF CLAIMS AND INTERESTS ...............................................................10
3.01 Class 1 - Priority Claims ........................................................................10
3.02 Class 2 - Allowed Claims of Old Notes ............................................................10
3.03 Class 3 - Other Secured Claims ...................................................................11
3.04 Class 4 - General Unsecured Claims ...............................................................11
3.05 Class 5 - Intercompany Notes .....................................................................11
3.06 Class 6 - Subordinated Claims ....................................................................11
3.07 Class 7 - Old Common Stock Interests .............................................................10
3.08 Classification Rules .............................................................................10
3.09 Inter-Company Claims .............................................................................11
ARTICLE 4 TREATMENT OF CLASSES UNDER THE PLAN ..................................................................12
4.01 Class 1 - Priority Claims ........................................................................12
4.02 Class 2 - Allowed Claims of Old Notes ............................................................12
4.03 Class 3 - Other Secured Claims ...................................................................11
4.04 Class 4 - General Unsecured Claims ...............................................................12
4.05 Class 5 - Claims of Holders of Intercompany Notes ................................................13
4.06 Class 6 - Subordinated Claims ....................................................................13
4.07 Class 7 - Old Common Stock and Interests .........................................................13
4.08 Controversy Concerning Impairment ................................................................12
ARTICLE 5 ACCEPTANCE OR REJECTION OF THE COMMITTE/HIGH RIVER PLAN ...............................................12
5.01 Impaired Classes Entitled To Vote ................................................................12
5.02 Acceptance by an Impaired Class of Claims ........................................................14
5.03 Presumed Acceptance Plan by Unimpaired Classes ...................................................14
5.04 Possible Presumed Acceptance by Unimpaired Class 3 ...............................................14
i
<PAGE>
ARTICLE 6 MEAN FOR IMPLEMENTATION OF
THE COMMITTEE/HIGH RIVER PLAN .................................................................14
6.01 Issuance of New Notes ............................................................................14
6.02 Issuance of New Common Stock .....................................................................13
6.03 Establishment of Unsecured Creditors Fund ........................................................14
6.04 Reserve ..........................................................................................14
6.05 Issuance of Subsidiary Stock .....................................................................14
ARTICLE 7 CONDITIONS PRECEDENT .................................................................................14
7.01 Conditions Precedent to Confirmation Date ........................................................14
7.02 Conditions to Effective Date .....................................................................16
7.03 Waiver of Conditions .............................................................................15
ARTICLE 8 DISTRIBUTIONS .........................................................................................15
8.01 Distributions ....................................................................................15
8.02 Regulatory Conditions to Distribution ............................................................15
8.03 Surrender of Notes and Other Securities ..........................................................17
8.04 Survival of Certain Terms of the Old Notes Indenture .............................................16
8.05 Method of Payment ................................................................................16
8.06 Timing of Payment ................................................................................16
8.07 Setoff ...........................................................................................16
8.08 De Minimis Cash Distributions ....................................................................16
8.09 Unclaimed Distributions to Creditors .............................................................18
8.10 Rounding; Fractional Portions. ...................................................................17
8.11 Treatment of Disputed Claims .....................................................................19
8.12 Estimation of Claims .............................................................................18
8.13 No Multiple Satisfactions ........................................................................18
8.14 Registration and Listing of New Notes and New Common Stock .......................................20
ARTICLE 9 EXECUTORY CONTRACTS ..................................................................................19
9.01 Assumption or Rejection of Executory Contracts and Unexpired Leases ..............................19
ii
<PAGE>
ARTICLE 10 EFFECTS OF CONFIRMATION ..............................................................................20
10.01 Revesting of Assets .............................................................................20
10.02 Discharge and Injunction ........................................................................20
10.03 Retention of Jurisdiction .......................................................................20
10.04 Subordination Rights ............................................................................24
10.05 Effectuating Documents; Further Transactions; Timing ............................................22
10.06 Ratification of Actions Taken ...................................................................22
10.07 Modification of this Plan .......................................................................22
10.08 Withdrawal of Proceedings by Old Notes Trustee ..................................................22
ARTICLE 11 MANAGEMENT AFTER CONFIRMATION .......................................................................22
11.01 Board of Directors.............................................................................. 22
11.02 Officers ........................................................................................23
11.03 No Corporate Action Required ....................................................................23
11.04 Powers and Duties of the Debtors ................................................................23
ARTICLE 12 MISCELLANEOUS PROVISIONS ............................................................................23
12.01 Exemption from Transfer Taxes ...................................................................23
12.02 Exculpation .....................................................................................24
12.03 Permanent Injunction ............................................................................24
12.04 Revocation or Withdrawal of the Plan ............................................................24
12.05 Binding Effect ..................................................................................24
12.06 Construction ....................................................................................24
12.07 Time ............................................................................................24
12.08 Headings ........................................................................................25
12.09 Governing Law ...................................................................................25
12.10 Existence of Committee ..........................................................................25
12.11 Benefit Programs ................................................................................25
12.12 Retiree Benefits ................................................................................25
12.13 Payment of Statutory Fees .......................................................................25
12.14 Cramdown ........................................................................................25
12.15 Execution of Plan Documents .....................................................................25
iii
<PAGE>
12.16 Post Consummation Effect Of Evidences Of Claims Or Interests ....................................25
12.17 Successors And Assigns...........................................................................26
12.18 Inconsistencies ..................................................................................26
12.19 Compliance With Applicable Law ...................................................................26
12.20 Severability .....................................................................................26
12.21 Post Confirmation Fees and Expenses .............................................................27
</TABLE>
iv
<PAGE>
The Official Committee of Unsecured Creditors appointed in the
above-captioned cases (the "Committee"), together with Cyprus LLC ("Cyprus") and
Larch LLC ("Larch"), each either a direct or indirect wholly owned limited
liability corporation owned by Carl C. Icahn (hereinafter collectively referred
to as "High River" and, together with the Committee, the "Proponents"), hereby
propose the following Fourth Amended Joint Plan of Reorganization (the
"Committee/High River Plan" or the "Plan") for the above-captioned Debtors
pursuant to section 1121(c) of the Bankruptcy Code.
DEFINITIONS
As used in this Plan, the following terms shall have the
respective meanings specified below (such meanings to be equally applicable to
the singular and plural, and the masculine, feminine and neuter forms of the
terms defined).
Administrative Expense Claim means a Claim for payment of any
costs or expenses of administration of the Cases incurred after the commencement
of the Cases allowable under section 503(b) or 507(a)(1) of the Bankruptcy Code,
including, without limitation: (a) the actual and necessary expenses of
preserving the estates of the Debtors; (b) the actual and necessary expenses of
operating the business of the Debtors (such as wages, salaries or commissions
for services rendered, or severance, bonuses or other amounts due and payable to
employees of the Debtors pursuant to any order of the Bankruptcy Court); (c)
indebtedness or obligations incurred or assumed by the Debtors in connection
with the conduct of their business, the acquisition or lease of property, or the
rendition of services to the Debtors; (d) allowances of compensation for legal
and other services and reimbursement of expenses awarded pursuant to sections
327,328, 330, 331, 503(b), or 1103 of the Bankruptcy Code, (e) any amounts
necessary to cure defaults under assumed leases pursuant to ss. 363(b)(1)(A) of
the Bankruptcy Code, and (f) all fees or charges assessed against the Estates of
the Debtors under 28 U.S.C. ss. 1930; provided, however, that an Exempt Tax
shall not be an Administrative Expense Claim.
Administrative Operating Expense Claim means all
Administrative Expense Claims other than Administrative Expense Claims of
Professionals.
ADR Procedure means the alternative dispute resolution
procedure for resolution of timely filed personal injury and product liability
claims approved by an order of the Bankruptcy Court dated August 24, 1998,
including any litigation commenced or to be commenced in accordance with such
procedure.
Allowed, when used in reference to a Claim or Interest, means
any Claim against or Interest in the Debtors: (a) proof or application for
allowance of which was (i) Filed on or before the date designated by the
Bankruptcy Court as the last date for Filing a Proof of Claim against or Proof
of Interest in the Debtors, (ii) later Filed with Bankruptcy Court leave after
notice and a hearing, or (iii) if no Proof of Claim or Proof of Interest or
application for allowance was Filed, which Claim or Interest has been or
hereafter is listed by the Debtors in the Schedules
<PAGE>
as liquidated in amount and not disputed or contingent; and (b) (i) which is due
and payable and as to which no objection to the allowance thereof has been
interposed within the applicable period of limitation fixed by this Plan, the
Bankruptcy Code, the Bankruptcy Rules, the Local Rules, or the Bankruptcy Court
or (ii) as to which any objection has been determined by Final Order of the
Bankruptcy Court, to the extent such objection has been resolved in favor of the
Holder of such Claim or Interest.
Assets means all property of the Estates of each of the
Debtors.
Avoiding Power Causes of Action means rights and remedies
accruing to the Debtors pursuant to the Bankruptcy Code, including sections
544(b), 547, 548, 549, 550, or 553(b) thereof.
Ballots means the ballots accompanying the Disclosure
Statement and this Committee/High River Plan upon which impaired Creditors shall
have indicated their acceptance or rejection of this Committee/High River Plan.
Bankruptcy Code means the Bankruptcy Reform Act of 1978, as
amended, and as codified in title 11 of the United States Code.
Bankruptcy Court means the United States Bankruptcy Court for
the District of New Jersey or any court having competent jurisdiction to hear
appeals or certiorari proceedings therefrom, or any successor thereto that may
be established by act of Congress or otherwise, and that has competent
jurisdiction over the Cases.
Bankruptcy Rules means the Federal Rules of Bankruptcy
Procedure, as amended from time to time, as applicable to the Cases.
Bar Date means the last date for filing Claims as fixed by the
Bankruptcy Court.
Business Day means any day except Saturday, Sunday or a "legal
holiday," as such term is defined in Bankruptcy Rule 9006(a).
Cases means the above-captioned cases under chapter 11 of the
Bankruptcy Code in which GBHC, Funding, and Holdings are the Debtors.
Cash means cash and cash equivalents.
Casino Commission means the New Jersey Casino Control
Commission.
Causes of Action means all legal and equitable claims,
demands, or causes of action held by the Debtors against any Entity, including
but not limited to, Avoiding Power Causes of Action and all Causes of Action
related to the Sands Trademark.
2
<PAGE>
Claim means a "claim" within the meaning of section 101(5) of
the Bankruptcy Code.
Class means a class of Claims or Interests as classified in
this Committee/High River Plan.
Collateral means any property of the Estate that secures an
Allowed Secured Claim.
Committee means the official committee of unsecured creditors
which was appointed in the Cases pursuant to section 1102 of the Bankruptcy
Code.
Committee/High River Plan or Plan means this First Amended
Joint Plan of Reorganization proposed by the Committee and High River, as the
same may be amended or modified by the Proponents. Any subsequently-filed
appendices, exhibits, or supplements hereto shall be deemed incorporated into
and made a part hereof, as if fully set forth herein.
Confirmation Date means the date the Clerk of the Bankruptcy
Court enters the Confirmation Order on the docket of the Bankruptcy Court.
Confirmation Hearing means the hearing before the Bankruptcy
Court to consider confirmation of the Committee/High River Plan.
Confirmation Order means an order of the Bankruptcy Court
confirming the Committee/High River Plan.
Creditor means any Entity that has a Claim against the Debtors
that arose on or before the Petition Date or a Claim against the Estates of any
kind specified in section 502(g), 502(h) or 502(i) of the Bankruptcy Code.
Debtors means GBHC, Funding, and Holdings in administratively
consolidated Case Nos. 98-10001, 98-10002, and 98-10003 pending in the United
States Bankruptcy Court for the District of New Jersey, and includes GBHC,
Funding, and Holdings as debtors-in-possession.
Disbursing Agent means the Reorganized Debtors or, with the
Proponents' consent, their designee or designees.
Disclosure Statement means the Second Amended Master
Disclosure Statement dated as of March __, 2000 filed by the Debtors, together
with the Disclosure Supplement filed by the Proponents, as each may be amended,
supplemented or further modified from time to time.
3
<PAGE>
Disclosure Supplement means the Fourth Amended Supplement to
the Master Disclosure Statement prepared by the Proponents.
Disputed Claim means a Claim which is not an Allowed Claim.
EBITDA, as applied to the Reorganized Debtors, means earnings
before interest, taxes, depreciation, and amortization.
Effective Date means a Business Day which is no more than ten
(10) Business Days after the Confirmation Date, upon which (a) no stay of the
Confirmation Order is in effect and (b) the conditions to the Effective Date set
forth in this Plan have been satisfied or waived. The closings of the
transactions contemplated by this Plan shall occur contemporaneously on the
Effective Date. The Proponents shall file a notice of the Effective Date within
three (3) days after its occurrence, which shall be served upon those requesting
notice in the Cases pursuant to Bankruptcy Rule 2002.
Eligible Holder means any Holder of Old Notes other than High
River or any of its affiliates.
Entity means an "entity" within the meaning of section 101(15)
of the Bankruptcy Code.
Estates mean the estates of the Debtors created upon the
commencement of the Cases pursuant section 541 of the Bankruptcy Code.
Exempt Tax means any stamp, recording or similar tax or charge
(including any penalties, interest or additions thereto) within the meaning of
section 1146(c) of the Bankruptcy Code which may be imposed by the laws of any
state upon the transactions contemplated under, or necessary for the success of,
the Committee/High River Plan, including without limitation, any mortgage
recording, securities transfer, deed transfer, documentary transfer, or gains
taxes.
Exercising Holder means an Eligible Holder of Old Notes that
elects to participate in accordance with the procedures set forth in Section
6.03 herein.
File, Filed, Filing, or Files shall mean file, filed, filing
or files, respectively, with the Bankruptcy Court in the Cases.
Final Order means an order or judgment of the Bankruptcy Court
or other court of competent jurisdiction, as entered on the docket of such
court, that has not been reversed or stayed, and as to which: (a) the time to
appeal or petition for certiorari has expired and no timely-filed appeal or
petition for certiorari is pending, or (b) any appeal taken or petition for
certiorari filed has been resolved by the highest court to which the order or
judgment was appealed or from wich certiorari was sought.
4
<PAGE>
Fractional Pool Trust means the trust to be established for
the purpose of aggregating, holding for so long as is necessary, and liquidating
as soon as practicable for the account and benefit of the Old Note Holders, the
fractional New Notes and distributing the proceeds thereof to the beneficial
holders of Old Note Claims in proportion to their respective rights to receive
fractional New Notes.
Fractional Pool Trust Agreement means the form of agreement
establishing the Fractional Pool Trust.
Fractional Pool Trustee means the Entity retained by the
Debtors under the Fractional Pool Trust Agreement to administer the Fractional
Pool Trust.
Fund Deposit has the meaning set forth in Section 4.04 herein.
Funding means GB Property Funding Corp.
GBCC means Greate Bay Casino Corporation.
GBHC means Greate Bay Hotel and Casino, Inc.
General Unsecured Claim means any Claim against the Debtors
which arose or which is deemed by the Bankruptcy Code to have arisen prior to
the Petition Date, and which is not a Claim in any other Class.
High River means Cyprus LLC and Larch LLC, each either a
direct or indirect wholly-owned limited liability company owned by Carl C.
Icahn.
High River Investment means High River's acquisition of
4,625,000 shares of New Common Stock on the Effective Date for the total
purchase price of $65 million in Cash.
High River Stock Purchase Agreement means that certain
agreement pursuant to which High River shall be obligated to make the High River
Investment.
Holder means any entity holding a Claim or Interest, and
includes the beneficial Holder of such Claim or Interest.
Holdings means GB Holdings, Inc.
Intercompany Notes means that certain Subordinated Promissory
Note of GBHC in favor of PRT Funding Corp. dated February 17, 1994 in the
principal amount of $10,000,000 and that certain Subordinated Promissory Note of
GBHC in favor of Pratt Casino Corporation dated January 14, 1997 in the
principal amount of $5,000,000.
5
<PAGE>
Interests means any and all rights arising out of the
ownership of Old Common Stock, including all Claims against the Debtors
resulting from the rescission of a purchase or sale of Old Common Stock, for
damages arising from the purchase or sale of Old Common Stock, or for
reimbursement or contribution allowed under section 502 on account of such a
Claim, and all rights arising out of contracts, options or warrants to purchase
or sell Old Common Stock.
Local Rules means the Local Bankruptcy Rules of the District
of New Jersey, as applicable to the Case.
LVSI means Las Vegas Sands, Inc., or any successor in
interest.
New By-Laws means the new By-Laws of Reorganized Holdings to
be effective from and after the Effective Date and which shall be in a form
acceptable to the Proponents, and filed no later than twenty (20) days prior to
the Confirmation Hearing.
New Certificate means the new Certificate of Incorporation of
Reorganized Holdings, to be effective from and after the Effective Date, and
which shall be in a form acceptable to the Proponents and filed no later than
twenty (20) days prior to the Confirmation Hearing.
New Common Stock means the ten million (10,000,000) shares of
new common stock of Reorganized Holdings, par value $ .01 per share, to be
issued pursuant to the Committee/High River Plan, in accordance with the
exemption from registration provided under section 1145 of the Bankruptcy Code.
New Notes means the $110 million principal amount of 11% First
Mortgage Notes due 2005, to be issued by Reorganized Holdings on the Effective
Date, in accordance with the exemption from registration provided under section
1145 of the Bankruptcy Code.
New Notes Indenture means the trust indenture pursuant to
which the New Notes will be issued, a copy of which will be filed no later than
twenty (20) days prior to the deadline for submission of Ballots.
New Notes Trustee means the financial institution to be
selected by the Proponents which will serve as trustee under the New Notes
Indenture.
Old Common Stock means the common stock of Holdings, GBHC, and
Funding issued and outstanding prior to the Petition Date, and includes any
options or warrants or rights to acquire Old Common Stock.
Old Guarantees means the guarantees by GBHC and Holdings of
the Old Notes.
6
<PAGE>
Old Notes means the 10-7/8% First Mortgage Notes due 2004
issued by Funding and guaranteed by GBHC and Holdings.
Old Notes Indenture means the Indenture pursuant to which the
Old Notes were issued.
Old Notes Trustee means the Entity serving as trustee under
the Old Notes Indenture.
Other Subordinated Claims means Claims against any of the
Debtors which are junior in priority to General Unsecured Claims by virtue of
contract, applicable law, or order of the Bankruptcy Court.
Petition Date means January 5, 1998, the date of Filing of the
voluntary petitions for relief commencing the Cases.
Plan Securities means the New Notes and the New Common Stock.
Plan Supplement means the appendices and/or supplements that
may be filed by the Proponents prior to the Confirmation Date which may include,
but not be limited to, the High River Stock Purchase Agreement, the New Notes
Indenture, the New Certificate of Incorporation and the New By-Laws, and such
other documents as may be necessary or appropriate.
Priority Claim means any Claim to the extent entitled to
priority in payment under sections 507(a)(2)-(7) or (9) of the Bankruptcy Code.
Priority Tax Claim means any Claim to the extent entitled to
priority in payment under section 507(a)(8) of the Bankruptcy Code.
Professionals means Entities whose compensation or
reimbursement of expenses must be authorized by order of the Bankruptcy Court
pursuant to sections 327, 328, 330, 331, 503(b), or 1103 of the Bankruptcy Code.
Proof of Claim or Proof of Interest means a Filed Proof of
Claim or Proof of Interest.
Record Date means the date on which Creditors entitled to vote
on the Committee/High River Plan are determined by their record ownership of
Claims, which date shall be the date of entry of an order of the Bankruptcy
Court approving the Disclosure Statement.
Regulatory Conditions means those conditions described in
Section 8.02 of this Plan.
7
<PAGE>
Reorganized, when referring to the Debtors or any one of them,
means the Debtors or any one of them after the Confirmation Order has been
entered and, for purposes of making or effectuating any distribution hereunder,
shall also include the Debtors or any one of them.
Sands means the real and personal property owned by GBHC and
used or useful in the conduct of the business of the Sands Casino Hotel, Indiana
Avenue and Brighton Park, Atlantic City, New Jersey.
Sands Trademark means the trademark "Sands" owned by LVSI, and
used by the Debtors in the conduct of their business operations at the Sands.
Schedules means the Schedules of Assets and Liabilities and
Statements of Executory Contracts and Financial Affairs, as amended, filed by
the Debtors in accordance with the Bankruptcy Rules.
Security Documents means the documents that create and perfect
all liens, mortgages and security interests which secure the Debtors'
obligations under the Old Notes.
Secured Claim means a Claim against the Debtors which is
deemed by the Bankruptcy Code to have arisen prior to the Petition Date and
which is (i) secured by a valid lien, security interest, or other encumbrance on
Collateral, or (ii) subject to setoff under section 553 of the Bankruptcy Code,
but only to the extent of the value of the Collateral, or to the extent of the
amount subject to setoff, determined in accordance with section 506(a) of the
Bankruptcy Code, as modified by section 1111(b) of the Bankruptcy Code.
Unclaimed Distribution means, in respect of any Class of
Claims, all Cash or other property deemed to be "Unclaimed Distributions"
pursuant to Section 8.09 of this Plan.
Unsecured Creditors Fund means an account to be established
under this Plan and used to pay (a) Allowed General Unsecured Claims as set
forth in Article 4 and (b) expenses of the Unsecured Creditors Fund
Administrator in excess of those paid by the Reorganized Debtors pursuant to
Section 2.04 hereof.
Unsecured Creditors Fund Administrator means the Entity
designated by the Committee, with the reasonable consent of High River, to
administer the Unsecured Creditors Fund.
Unsecured Creditors Fund Expenses means the expenses,
including attorneys fees, incurred by the Unsecured Creditors Fund Administrator
in administering the Unsecured Creditors Fund, inclusive of any fees incurred in
negotiating and/or litigating the pending personal injury matters.
8
<PAGE>
Voting Procedures Order means the Order Scheduling
Confirmation Hearing for this Plan of Reorganization and Establishing Voting
Procedures thereto dated ________,
Document References. All references to documents shall
include all addenda, exhibits and schedules attached thereto or referred to
therein.
Other Definitions. A term used and not defined herein, but
that is defined in the Bankruptcy Code, shall have the meaning set forth
therein. The words "herein," "hereof," "hereto," "hereunder," and others of
similar import refer to this Committee/High River Plan as a whole and not to any
particular section, subsection, or clause contained in this Committee/High River
Plan. The word "including" shall mean "including, without limitation." The
singular shall include the plural and vice versa unless the context otherwise
requires.
ARTICLE 2
ADMINISTRATIVE AND PRIORITY TAX CLAIMS
2.01 Administrative Expense Claims.
(a) Except as set forth in section 2.03 below, Allowed
Administrative Operating Expense Claims will be paid in Cash, on the Effective
Date, or, if such Claim becomes Allowed after the Effective Date, within five
(5) days after such Claim becomes Allowed. All requests by Professionals for
final allowance of compensation and reimbursement of expenses accrued as of the
Effective Date must be Filed with the Court within sixty (60) days after the
Effective Date and will be paid within five (5) days after such Claims become
Allowed. The estimated amount of unpaid fees and expenses of Professionals as of
the Effective Date will be deposited by the Debtors in a segregated account on
or prior to the Effective Date, in accordance with Bankruptcy Rule 3020(a). Such
escrowed funds shall be used to pay Allowed Administrative Expense Claims of
Professionals and any funds remaining after making all such payments shall
revest in the Reorganized Debtors.
(b) Holders of Administrative Operating Expense Claims shall
not be required to File any request for payment of such Claims. All
Administrative Operating Expense Claims which are not due and payable by their
terms as of Effective Date shall be assumed by the Reorganized Debtors, and paid
in accordance with their terms, subject to all applicable offsets and defenses
which the Debtors, the Reorganized Debtors, or any one of them, may hold to
payment of such Claims.
9
<PAGE>
2.02 Priority Tax Claims. At the option of the Proponents,
each holder of an Allowed Priority Tax Claim shall be paid the full amount of
such Allowed Priority Tax Claim, (a) in Cash, on the later of (i) the Effective
Date (or as soon thereafter as is practicable), or (ii) the first Business Day
after such Claim becomes an Allowed Claim (or as soon thereafter as is
practicable); or (b) in equal quarterly installments of principal and interest
at the applicable legal rate over a period not to exceed six (6) years from the
date of assessment of such Priority Tax Claim.
2.03 Old Notes Trustee Fees and Expenses. After application to
the Bankruptcy Court within sixty (60) days after the Effective Date and
approval of such application by Final Order, the Reorganized Debtors will pay
all Allowed fees and expenses of the Old Notes Trustee incurred in or in
connection with the Cases. The Reorganized Debtors will deposit the estimated
amount of fees and expenses of the Old Notes Trustee in a segregated account on
the Effective Date, which funds will be used to make payments of Allowed fees
and expenses of the Old Notes Trustee. Nothing contained in this Plan affects
the Old Notes Trustee's rights pursuant to the Old Notes Indenture to assert a
lien on the distributions due to Holders of Old Notes to secure payment of its
fees and expenses. After the Effective Date, the reasonable fees and expenses of
the Old Notes Trustee incurred in making distributions to Holders of Old Notes
under this Plan shall be paid by the Reorganized Debtors in the ordinary course.
If the Old Notes Trustee does not serve as the Disbursing Agent, then the Plan
Securities distributed to the Disbursing Agent may be subject to the lien of the
Old Notes Trustee under the Old Notes Indenture.
2.04 Unsecured Creditors Fund Expenses. After the Effective
Date, the Reorganized Debtors shall from time to time reimburse the Unsecured
Creditors Fund Administrator for the Unsecured Creditors Fund Expenses in an
amount that shall not exceed $200,000, subject to allowance of such expenses
upon application by the Unsecured Creditors Fund Administrator to the Bankruptcy
Court. The remaining Unsecured Creditors Fund Expenses, if any, shall be paid
from the Unsecured Creditors Fund, subject to allowance of such expenses upon
application by the Unsecured Creditors Fund Administrator to the Bankruptcy
Court.
ARTICLE 3
CLASSIFICATION OF CLAIMS AND INTERESTS
3.01 Class 1 - Priority Claims. Class 1 consists of all
Allowed Priority Claims against any Debtor. Class 1 is not impaired.
3.02 Class 2 - Allowed Claims of Old Notes. Class 2
consists of all Allowed Claims of Holders of Old Notes against any Debtor.
Class 2 is impaired.
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3.03 Class 3 - Other Secured Claims. Class 3 consists of all
Allowed Secured Claims (other than the Old Notes) against any Debtor. Class 3
may be unimpaired depending upon the treatment option selected by the
Proponents.
3.04 Class 4 - General Unsecured Claims. Class 4 consists
of all Allowed General Unsecured Claims against any Debtor. Class 4 is
impaired.
3.05 Class 5 - Intercompany Notes. Class 5 consists of all
Allowed Claims of Holders of any Intercompany Notes against any Debtor. Class 5
is impaired.
3.06 Class 6 - Other Subordinated Claims. Class 6
consists of all Allowed Subordinated Claims against any Debtor. Class 6 is
impaired.
3.07 Class 7 - Old Common Stock Interests. Class 7 consists
of all Old Common Stock Interests in the Debtors. Class 7 is impaired.
3.08 Classification Rules. A Claim is in a particular Class
only to the extent that the Claim qualifies within the description of Claims of
that Class, and such Claim is in a different Class to the extent that the
remainder of the Claim qualifies within the description of the different Class.
Pursuant to section 1123(a)(4) of the Bankruptcy Code, all Allowed Claims of a
particular Class shall receive the same treatment unless the Holder of a
particular Allowed Claim agrees to a less favorable treatment for such Allowed
Claim. Pursuant to section 510(a) of the Bankruptcy Code, this Plan shall give
effect to subordination agreements which are enforceable under applicable
nonbankruptcy law, except to the extent the beneficiary or beneficiaries thereof
agree to less favorable treatment. This Plan shall also give effect to the
subordination rules of sections 510(b) and (c) of the Bankruptcy Code. The
inclusion of a Creditor by name in any Class is for purposes of general
description only, and includes all Entities claiming as beneficial interest
holders, assignees, heirs, devisees, transferees or successors in interest of
any kind of the Creditor named.
3.09 Inter-Company Claims. Claims by any Debtor against any
other Debtor shall be cancelled and extinguished, including all Claims arising
out of the Old Guarantees.
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ARTICLE 4
TREATMENT OF CLASSES UNDER THE PLAN
4.01 Class 1 - Priority Claims. Class 1 is unimpaired. Each
Holder of a Class 1 Claim shall be paid the Allowed amount of such Claim,
including all applicable interest and other charges to which the Holder of such
Allowed Priority Claim may be entitled under applicable law or contract, to the
extent permitted under the applicable provision of section 507(a), in Cash, on
the later of: (a) the Effective Date (or as soon thereafter as is practicable)
and (b) the first Business Day after such Claim becomes an Allowed Claim (or as
soon thereafter as is practicable).
4.02 Class 2 - Allowed Claims of Old Notes. Class 2 is
impaired. Holders of Class 2 Claims shall share pari passu and pro rata in the
New Notes and 5,375,000 shares of New Common Stock. All distributions to Class 2
shall occur on the Effective Date (or as soon thereafter as is practicable) or
as soon as legally permissible thereafter. After the Effective Date, the
Reorganized Debtors shall use their reasonable good faith best efforts to
register the Plan Securities and have them listed on a national securities
exchange pursuant to Section 8.14 herein.
4.03 Class 3 - Other Secured Claims. Holders of Class 3
Claims, at the option of the Proponents, shall either (a) be paid in full in
Cash the Allowed Amount of such Secured Claim in full satisfaction and discharge
of such Creditor's lien, (b) receive deferred Cash payments totaling the Allowed
amount of such Claim of a value as of the Effective Date at least equal to the
value of such Creditor's interest in the Collateral securing such Claim, and
shall retain the lien securing such Claim and all rights under any instrument
evidencing such Claim until paid as provided herein, (c) receive, pursuant to
abandonment by the Debtors possession of and the right to foreclose its lien on
the Collateral securing such Claim, or (d) be treated in accordance with an
agreement between the Proponents and the Holder of such Claim. In the event the
treatment provided in subparagraphs (a), (b) or (c) above results in payment to
such Creditor of less than the Allowed amount of its Claim, such Creditor will
receive for its deficiency Claim a distribution from the Reorganized Debtors
equal to the amount it would have received if its deficiency Claim were treated
as a General Unsecured Claim. This distribution will be made directly from the
Reorganized Debtors and not from the Unsecured Creditors Fund.
4.04 Class 4 - General Unsecured Claims. Class 4 is impaired.
Each holder of a Class 4 Claim shall receive, in Cash, on the later of the
Effective Date or the date on which such Claim becomes an Allowed Claim,
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its pro rata share of the Unsecured Creditors Fund. The Unsecured Creditors Fund
shall consist of Cash deposited by the Reorganized Debtors on the Effective Date
(the "Fund Deposit") equal to $5,360,000; provided, however, that if the
Bankruptcy Court determines that Holders of Claims in Class 4 may receive more
value than is to be distributed with regard to other unsecured Claims, the Fund
Deposit shall be increased to the level that would afford, up to an estimated
100% dividend on the estimated total Allowed Class 4 Claims, as the Bankruptcy
Court determines does not unfairly discriminate pursuant to section 1129(b) of
the Bankruptcy Code. In addition, the Class 4 Creditors may also receive such
other and different treatment as the Bankruptcy Court permits so as to insure
maximum recovery by Class 4 Creditors in accordance with applicable law.
4.05 Class 5 - Intercompany Notes Claims. Holders of Class 5
Claims shall be allocated New Common Stock in an amount equal to approximately
995,079 shares. However, pursuant to section 510 of the Bankruptcy Code, all New
Common Stock so allocated shall be distributed to Holders of Old Notes in Class
2, on account of and pursuant to the subordination provisions of the
Intercompany Notes. Holders of Claims in this Class shall retain no distribution
in respect of their Claims.
4.06 Class 6 - Other Subordinated Claims. Holders of
Class 6 Claims shall receive no distribution in respect of their Claims.
4.07 Class 7 - Old Common Stock Interests. Holders of Class 7
Interests shall receive no distribution in respect thereof. The Old Common Stock
Interests shall be cancelled, extinguished, and of no further force and effect
as of the Effective Date.
4.08 Controversy Concerning Impairment. In the event of a
controversy as to whether any Creditor or Holder of an Interest, or Class of
Creditors or Class of Holders of Interests is impaired under this Plan, the
Bankruptcy Court shall, after notice and a hearing, determine such controversy.
ARTICLE 5
ACCEPTANCE OR REJECTION OF THE COMMITTEE/HIGH RIVER PLAN
5.01 Impaired Classes Entitled To Vote. Classes 2 through 7
are impaired under this Plan (with the possible exception of Class 3 depending
on the treatment selected by the Proponents). Each Holder of an Allowed Claim in
Classes 2 through 4 shall be entitled to vote to accept or reject
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this Plan. Classes 5, 6, and 7 are presume to have rejected this Plan pursuant
to section 1126(g) of the Bankruptcy Code and do not have the right to vote
thereon.
5.02 Acceptance by an Impaired Class of Claims. A Class of
Creditors shall have accepted this Plan if Creditors casting Ballots holding at
least two-thirds in the aggregate dollar amount and more than one-half in number
of the Allowed Claims of such Class vote to accept this Plan.
5.03 Presumed Acceptance by Unimpaired Classes Class 1 is
unimpaired under this Plan, and, therefore, is conclusively presumed to accept
this Plan pursuant to section 1126(f) of the Bankruptcy Code and does not have a
right to vote thereon.
5.04 Possible Presumed Acceptance by Unimpaired Class 3 In the
event that the Proponents elect not to impair Class 3 Claims, the Proponents
reserve the right to have Class 3 presumed to have accepted this Plan pursuant
to section 1126(f) of the Bankruptcy Code, notwithstanding the actual votes of
Holders of such Claims.
ARTICLE 6
MEANS FOR IMPLEMENTATION OF THE COMMITTEE/HIGH
RIVER PLAN
6.01 Issuance of New Notes On the Effective Date and subject
to the Regulatory Conditions, (i) Reorganized Funding will issue and Reorganized
Holdings and Reorganized GBHC will guarantee, the New Notes in integral
multiples of $1,000, in accordance with the New Notes Indenture and all
mortgages, liens and security interests securing the New Notes will be created
and perfected, (ii) the New Notes will be delivered to the Disbursing Agent, and
(iii) the Old Notes Indenture, the Security Documents, and all mortgages, liens,
security interests and encumbrances securing the Old Notes will be deemed
canceled, terminated, extinguished and of no force or effect as between the
Debtors and the Old Notes Trustee.
6.02 Issuance of New Common Stock. On the Effective Date and
subject to the Regulatory Conditions, Reorganized Holdings will issue and
deliver 4,625,000 shares of New Common Stock to High River in exchange for the
High River Investment. Reorganized Holdings will issue and deliver to the
Disbursing Agent an additional 5,375,000 shares of New Common Stock, for
distribution to Holders of Old Notes.
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6.03 Establishment of Unsecured Creditors Fund No later than
20 days prior to the Confirmation Date, the Committee shall designate the
Unsecured Creditors Fund Administrator. On the Effective Date, the Reorganized
Debtors shall transfer the Fund Deposit to the Unsecured Creditors Fund pursuant
to Section 4.04 herein.
6.04 Other Reserves As soon as practicable after the
Confirmation Date, the Disbursing Agent shall reserve for distribution all Cash
to be distributed or escrowed on the Effective Date under this Plan other than
that the Fund Deposit to be transferred to the Unsecured Creditors Fund pursuant
to Section 4.04 herein.
6.05 Issuance of Subsidiary Stock. On the Effective Date,
Reorganized Funding and Reorganized GBHC will each issue to Reorganized Holdings
100 shares of common stock in exchange for $250, which will represent all of the
issued and outstanding common stock of Reorganized Funding and Reorganized GBHC.
ARTICLE 7
CONDITIONS PRECEDENT
7.01 Conditions Precedent to Confirmation Date. The
occurrence of the Confirmation Date is subject to the satisfaction or waiver
of each of the following conditions:
(a) the Bankruptcy Court has entered the Confirmation Order in
form and substance acceptable to the Proponents containing findings, supported
by evidence adduced at the Confirmation Hearing, or ordering, among other
things, that upon the occurrence of the Effective Date, the issuance of all Plan
Securities and the execution of any required indenture and security documents in
respect thereto shall have been duly and validly authorized by all necessary
corporate action; that the lien, title or other interest in collateral created
by such indenture and instruments shall be valid and binding and enforceable
against the Reorganized Debtors, as the case may be, and such collateral shall
be subject to no prior, pari passu or subordinate encumbrances or claims except
as provided for in such documents; that any fractional note pool trustee as
required by the Fractional Pool Trust Agreement shall be authorized to serve as
such under the Fractional Pool Trust Agreement and shall be authorized to rely
on information concerning the identity and size of beneficial holders of the Old
Notes from registered holders of such Notes and that the disbursing agents are
authorized to aggregate and deliver fractional New Notes aggregated into New
Notes to such Fractional Pool Trustee; that, pursuant to section 1146(c) of the
Bankruptcy Code, the issuance, transfer or exchange of notes or equity
securities under the Committee/High River Plan, the creation of any mortgage,
deed of
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trust or other security interest, the making or assignment of any lease or
sublease, or the making or delivery of any deed or other instrument of transfer
under, in furtherance of, or in connection with the Committee/High River Plan,
including, without limitation, any merger agreements or agreements of
consolidation, deeds, bills of sale or assignments executed in connection with
any of the transactions contemplated under the Committee/High River Plan, shall
not be subject to any stamp, real estate transfer, mortgage recording or other
similar tax; all sale transactions consummated by the Debtors and approved by
the Bankruptcy Court on and after the Petition Date through and including the
Effective Date including the sale by the Debtors of owned property pursuant to
section 363(b) of the Bankruptcy Code and the assumption, assignment and sale by
the Debtors of unexpired leases of non-residential real property pursuant to
section 365(a) of the Bankruptcy Code, shall be deemed to have been made under,
in furtherance of, or in connection with the Committee/High River Plan and,
thus, shall not be subject to any stamp, real estate transfer, mortgage
recording or other similar tax; and that all recording officers and other
entities whose duties include recordation of documents lodged for recording
shall record, file and accept such documents delivered under the Committee/High
River Plan without the imposition of any charge, fee, governmental assessment or
tax and in such other form and substance reasonably satisfactory to the
Proponents;
(b) the Debtors have been authorized to assume all leases
and executory contracts which the Proponents may seek to assume; and
(c) the Debtors have received any consent of any governmental
units whose consent is required for confirmation.
7.02 Conditions Precedent to Effective Date. The
occurrence of the Effective Date is subject to the satisfaction or waiver of
each of the following conditions:
(a) the Confirmation Order has become a Final Order;
(b) the New Notes Indenture, in a form reasonably satisfactory
to the Proponents, has been qualified under the Trust Indenture Act;
(c) no conditions (other than Regulatory Conditions) to the
issuance or authentication of the New Notes or New Common Stock to be
distributed to the Disbursing Agent pursuant to this Plan or the New Notes
Indenture shall be unsatisfied;
(d) the New Notes and New Common Stock have been
authenticated and distributed to the Disbursing Agent;
(e) all other requirements of applicable laws have been
satisfied; and
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(f) the Casino Commission has approved the issuance of Plan
Securities and such other provisions of this Plan for which Casino Commission
approval may be necessary under applicable law to consummate the Plan.
7.03 Waiver of Conditions. The Proponents shall have the right
to waive the condition to the Confirmation Date set forth in Section 7.01(b)
herein. The Proponents shall have the right to waive the condition to the
Effective Date set forth in Section 7.02(a) herein notwithstanding the pendency
of an appeal of the Confirmation Order or any order related thereto, so long as
there is no stay of the Confirmation Order in effect. The Effective Date may
occur before the expiration of time to take an appeal or to seek reconsideration
of the Confirmation Order without the giving of any notice to any objecting
party. In the event of any such appeal, the Proponents may seek the dismissal of
such appeal as moot following the Effective Date.
ARTICLE 8
DISTRIBUTIONS
8.01 Distributions. All distributions under this Plan other
than those to members of Class 4 shall be made by the Disbursing Agent. All
distributions to members of Class 4 shall be made by the Unsecured Creditors
Fund Administrator. The record date for all distributions shall be the
Confirmation Date.
8.02 Regulatory Conditions to Distribution. The Disbursing
Agent shall issue the New Notes and New Common Stock to Holders of Old Notes
entitled to receive such securities as and when all regulatory approvals
required as a condition to issuance of such New Notes or New Common Stock to
such Holder (the "Regulatory Conditions") have either been granted by the
appropriate regulatory body, have been waived, or are not required under
applicable law. An Entity that is not entitled to be issued New Common Stock by
reason of Regulatory Conditions or otherwise shall have no rights of a Holder of
such New Common Stock, including rights to vote such shares, until all
Regulatory Conditions with respect to such Entity or other requirements have
been satisfied and the New Common Stock has been issued to the Entity.
8.03 Surrender of Notes and Other Securities. Except as
otherwise ordered by the Bankruptcy Court, to receive any distribution under
this Plan, each Holder of an Old Notes Claim will be required to surrender all
of its Old Notes to the Disbursing Agent. Failure to comply with such
requirements will bar a Holder of Old Notes from receiving any distributions
under this Plan. Notwithstanding the foregoing, all of the Old Notes will be
deemed surrendered, canceled, and of no further force or effect as of the
Effective Date, whether or not the Old Notes are delivered to the Disbursing
Agent. Delivery of the Old Notes is required for administrative convenience only
and any such
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delivery shall not alter a Holder of Old Notes' legal or equitable rights
against any Entity other than the Debtors, if any.
The manner and procedure to be followed for surrendering Old
Notes and for providing necessary affidavits and bonds shall be prescribed by
the Disbursing Agent upon reasonable notice sent to all Holders of Old Note
Claims.
8.04 Survival of Certain Terms of the Old Notes Indenture.
Notwithstanding the termination and cancellation of the Old Notes, the Old Notes
Indenture and the Security Documents as respects the Debtors, the provisions of
the Old Notes Indenture governing the relationship of the Old Notes Trustee and
the Holders of Old Notes, including those provisions relating to distributions,
the Old Notes Trustee's right to payment and liens on property to be distributed
to Holders of Old Notes, if any, and the Trustee's right of indemnity, if any,
shall not be affected by this Plan.
8.05 Method of Payment. Any Cash payment made by the
Disbursing Agent pursuant to this Plan shall be in U.S. dollars, either by
check drawn on a domestic bank or wire transfer.
8.06 Timing of Payment. Any payment or distribution required
to be made under this Plan on a day other than a Business Day shall be due on
the next succeeding Business Day.
8.07 Setoff. Nothing contained herein shall be deemed to waive
the Debtors' statutory or common law right of setoff, which may be enforced as
to Class 4 Claims by the Unsecured Creditors Fund Administrator.
8.08 De Minimis Cash Distributions. The Disbursing Agent or
Unsecured Creditors Fund Administrator shall not be required to distribute Cash
to any Creditor if the amount of Cash to be distributed to such Creditor is less
than $5.00.
8.09 Unclaimed Distributions to Creditors.
(a) Non-Negotiated Checks and Other Consideration. If an
Entity entitled to receive Cash under the Committee/High River Plan fails to
present for payment a check issued to such Holder pursuant to this Plan within
ninety (90) days of the date such check was issued, or if any distributions are
returned due to an incorrect or incomplete address for which neither the
Debtors, the Reorganized Debtors, nor the Unsecured Creditors Fund Administrator
have received a correct address, then the amount of Cash or other property
attributable to such check or distribution shall be deemed to be Unclaimed
Distributions and the payee of such check or distribution shall be deemed to
have no further Claim in respect of such check or distribution,
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and shall not be entitled to participate in any further distributions under this
Plan. Nothing in this Plan shall require the Debtors, the Reorganized Debtors,
or the Unsecured Creditors Fund Administrator to attempt to locate an Entity. In
the event that any New Notes or New Common Stock distributable to the Holders of
Old Notes have not been distributed by the Disbursing Agent to the Holders of
Old Notes Claims within two (2) years of the later of the Effective Date or the
satisfaction of or failure to satisfy the Regulatory Conditions, then such
consideration shall be deemed to be Unclaimed Distributions. The above time
limit shall not apply to distributions to Holders of Old Notes that the Old
Notes Trustee may make pursuant to the Old Notes Indenture that are independent
of the consideration being distributed pursuant to this Plan.
(b) Revesting of Unclaimed Distributions. All Unclaimed
Distributions of Cash, New Notes, or New Common Stock shall revest in the
Reorganized Debtors except that any Unclaimed Distributions from the Unsecured
Creditors Fund will be returned to the Unsecured Creditors Fund Administrator
for further distribution to holders of Allowed General Unsecured Claims, subject
to the return of the Excess Fund Deposit pursuant to Section 4.04 of the Plan.
8.10 Rounding; Fractional Portions. Whenever any payment of a
fraction of a cent would otherwise be called for, the actual payment shall
reflect a rounding of such fraction to the nearest whole cent, with one-half
cent being rounded up to the nearest whole cent. To the extent Cash remains
undistributed as a result of the rounding of such fraction to the nearest whole
cent, such Cash shall be treated as Unclaimed Distributions under Section 8.09
herein. Whenever any distribution of a fraction of a share of New Common Stock
would otherwise be called for, the actual distribution will reflect a rounding
of such fraction down to the nearest whole number of shares. Whole shares of New
Common Stock not distributed because of the provisions of this Section will be
treated as Unclaimed Distributions under Section 8.09 herein. New Notes will be
issued in integral multiples of $1,000. No fractional portions of New Notes will
be issued. Notwithstanding this "Rounding" provision, fractional New Notes will
be aggregated by the Disbursing Agent based upon information on beneficial
holder Ballots or otherwise from registered Holders of Old Notes and
intermediary Holders of Old Notes, and will be delivered to the Fractional Note
Pool Trustee for sale pursuant to the Fractional Pool Trust Agreement, with the
cash proceeds to be distributed to Holders of Old Notes in lieu of fractional
portions, as provided by the Fractional Pool Trust Agreement as directed by the
Disbursing Agent.
8.11 Treatment of Disputed Claims. Disputed Claims shall be
treated as follows under this Plan:
(a) Objections to Claims. Except as otherwise provided by the
Bankruptcy Court or in this Plan, all objections to Claims shall be Filed and
served on the Holders of such Claims on or before the later of (i) sixty (60)
days after the Confirmation Date, (ii) sixty (60) days after a particular Proof
of Claim is Filed, except that such Claim shall not be deemed an Allowed Claim
until after the sixty (60) day period lapses, and (iii) such additional date as
the
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Bankruptcy Court may fix upon application of the Debtors; provided, however,
that no party in interest shall be required to File an objection to any Claim
listed in the Schedules as disputed, contingent, unliquidated or undetermined
and for which no Proof of Claim was Filed, which Claim shall be barred and
disallowed in its entirety. After the Effective Date, the Unsecured Creditors
Fund Administrator shall have the sole right to object to or seek the estimation
of any Claims which are to be paid from the Unsecured Creditors Fund.
Administration of Disputed Claims by the Unsecured Creditors Fund Administrator
shall remain subject to the supervision of the Bankruptcy Court.
(b) No Distributions Pending Allowance. Notwithstanding any
other provision of this Plan to the contrary, no distribution shall be made to
the Holder of a Disputed Claim or the Holder of a Claim who is the subject of a
proceeding against it by the Debtors, unless and until such Disputed Claim
becomes an Allowed Claim or such proceeding is resolved.
(c) Distributions After Allowance. Once a Disputed Claim
becomes an Allowed Claim, distributions on account of such Claim shall be made
in accordance with the provisions of this Plan governing the Class of Claims to
which the respective Claim belongs.
(d) ADR Procedure. The ADR Procedure will continue in effect
after the Effective Date under the supervision of the Bankruptcy Court and shall
be administered by the Unsecured Creditors Fund Administrator. All costs and
expenses of administering the ADR Procedure incurred on or after the Effective
Date shall be deemed Unsecured Creditors Fund Expenses.
8.12 Estimation of Claims. At any time prior to the Effective
Date, or within sixty (60) days thereafter, the Proponents, the Reorganized
Debtors, or the Unsecured Creditors Fund Administrator may seek the estimation
of a Disputed Claim in accordance with the applicable provisions of the
Bankruptcy Code and Bankruptcy Rules; provided however, that after the Effective
Date, only the Unsecured Creditors Fund Administrator may seek the estimation of
a Disputed Class 4 Claim. The estimated amount of a Disputed Claim shall be
fixed by Final Order, which shall be deemed the amount of such Claim for all
purposes under this Plan.
8.13 No Multiple Satisfactions An Entity that holds a Claim
against more than one Debtor that arises from the same right to payment or
equitable remedy that gives rise to a right to payment, such as a Holder of a
Claim for a loan given to one Debtor, which loan is guaranteed by another
Debtor, shall only receive a distribution as if the Entity was the Holder of a
Claim against one Debtor. Such distribution shall be deemed to be in full
satisfaction of the Entity's Claims against all Debtors.
8.14 Registration and Listing of New Notes and New Common
Stock After the Effective Date, the Reorganized Debtors will use their
reasonable good faith best efforts to
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register the New Notes and New Common Stock in accordance with applicable law
and to cause such securities to be listed on a national exchange. Such
securities shall be issued under this Plan in reliance on the exemption from
registration provided in section 1145 of the Bankruptcy Code, subject to the
approval of the Casino Commission.
ARTICLE 9
EXECUTORY CONTRACTS
9.01 Assumption or Rejection of Executory Contracts and
Unexpired Leases.
(a) Rejection of Executory Contracts and Unexpired Leases.
Subject to Section 9.01(b) and 9.01(c) herein, all executory contracts and
unexpired leases that exist between the Debtors and any Entity, which have not
been assumed or rejected prior to the Effective Date shall be deemed rejected as
of the Effective Date pursuant to section 365 of the Bankruptcy Code, except for
any executory contract or unexpired lease that has been assumed pursuant to an
order of the Bankruptcy Court entered at or prior to the Effective Date, or
which is subject to a pending application to assume or to extend the time to
assume or reject. Nothing contained herein shall constitute a waiver of any
claim, right, or cause of action that the Debtors may hold against any lessor or
lessee or party to an executory contract with the Debtors, including the insurer
under any policy of insurance.
(b) Sands Trademark. Notwithstanding anything to the contrary
herein, all executory contracts that exist between the Debtors and any Entity
concerning or relating to the Debtors' rights in the Sands Trademark that are
susceptible to assumption pursuant to section 365 of the Bankruptcy Code shall
be assumed under this Plan.
(c) Approval of Assumption or Rejection of Leases and
Contracts. Entry of the Confirmation Order shall constitute the approval,
pursuant to section 365(a) of the Bankruptcy Code, of the assumption or
rejection of the executory contracts and unexpired leases to be assumed or
rejected pursuant to this Plan. Notice of the Confirmation Hearing shall
constitute notice to any non-debtor party to an executory contract or unexpired
lease that is to be assumed or rejected under this Plan.
(d) Bar Date for Filing Proofs of Claim Relating to Executory
Contracts and Unexpired Leases Rejected Pursuant to this Plan. Any and all
Proofs of Claim arising out of the rejection of an executory contract or
unexpired lease rejected pursuant to this Article 9 must be Filed within thirty
(30) days after the Effective Date. Any Holder of a Claim arising out of such
rejection of an executory contract or unexpired lease who fails to File a Proof
of Claim within such time shall be forever barred, estopped and enjoined from
asserting such Claim against the Debtors, the Reorganized Debtors, or their
Estates. Unless otherwise ordered by the
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Bankruptcy Court, all Claims arising from the rejection of executory contracts
and unexpired leases shall be treated as General Unsecured Claims under this
Plan. Nothing contained herein shall extend the time for Filing a Proof of Claim
for rejection of any contract or lease rejected prior to the Confirmation Date.
(d) Options. Any options, warrants or other equity interests
representing the right to acquire Old Common Stock shall be canceled as of the
Effective Date. All Claims arising under such warrants or options shall be
classified in Class 7.
ARTICLE 10
EFFECTS OF CONFIRMATION
10.01 Revesting of Assets. Except as otherwise set forth
herein, subject to the provisions of and for the purposes of distributions in
accordance with this Plan, all property of the Estates, including all Causes of
Action, shall revest in the Reorganized Debtors on the Effective Date. Such
revested property shall be free and clear of all liens, claims, encumbrances and
interests, except as otherwise provided in this Plan. The Reorganized Debtors
shall be authorized to prosecute all Causes of Action after the Effective Date.
10.02 Discharge and Injunction. Pursuant to section 1141 of
the Bankruptcy Code, all Claims against or Interests in the Debtors will be
discharged and deemed satisfied upon the Effective Date. As of the Effective
Date, all Entities that have held, currently hold or may hold a Claim or other
debt or liability against the Debtors affected by this Plan are enjoined from
taking any actions to collect or recover in any manner on account of any such
Claims, debts or liabilities from any or all of the Assets, except as otherwise
provided in this Plan. The Unsecured Creditors Fund Administrator and all
General Unsecured Creditors will have no recourse against the Reorganized
Debtors, their Estates, or the Proponents after the Effective Date, except for
payments for reimbursement of expenses allowed by the Bankruptcy Court up to
$200,000 related to the administration of the Unsecured Creditors Fund pursuant
to Section 2.04 herein.
10.03 Retention of Jurisdiction. (a) Following the
Effective Date, the Bankruptcy Court shall retain and have jurisdiction for the
following purposes:
(i) to adjudicate all controversies concerning the
classification or allowance of any Claims or Interests;
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(ii) to liquidate, allow, or disallow any Claims which
are disputed, contingent, or unliquidated;
(iii) to determine any and all objections to the allowance of
Claims or Interests, or counterclaims to any Claim;
(iv) to determine any and all applications for allowance of
compensation and reimbursement of expenses and any other fees and expenses
authorized to be paid or reimbursed under the Bankruptcy Code or this Plan;
(v) to determine any applications pending on the Effective
Date for the rejection or assumption of executory contracts or unexpired leases
or for the assumption and assignment, as the case may be, of executory contracts
or unexpired leases to which any Debtor is a party or with respect to which it
may be liable, and to hear and determine, and if need be to liquidate, any and
all Claims arising therefrom;
(vi) to adjudicate any actions brought by the Debtors on any
Causes of Action, at any time prior to expiration of the relevant statute of
limitations;
(vii) to determine any and all applications, adversary
proceedings, and contested or litigated matters that may be pending on the last
date for objections to Claims;
(viii) to consider any modifications of this Plan, remedy any
ambiguity, defect or omission or reconcile any inconsistency in any order of the
Bankruptcy Court, including the Confirmation Order, to the extent authorized by
the Bankruptcy Code;
(ix) to determine all controversies, suits and disputes that
may arise in connection with the interpretation, enforcement, or consummation of
this Plan;
(x) to consider and act on the compromise and settlement of
any Claim or cause of action by or against the Debtors or the Estates, including
but not limited to determining all controversies, suits and disputes that may
arise in connection with the interpretation, enforcement or consummation of such
compromises and settlements previously approved by the Bankruptcy Court or that
may be approved in the future;
(xi) to issue orders in aid of execution of this Plan to the
extent authorized by section 1142 of the Bankruptcy Code;
(xii) to determine such other matters as may be set forth in
the Confirmation Order or which may arise in connection with this Plan or the
Confirmation Order;
(xiii) to adjudicate disputes over the issuance of New
Notes or New Common Stock to Holders of Allowed Claims; and
23
<PAGE>
to administer the ADR Procedure.
(b) The Bankruptcy Court shall have exclusive jurisdiction
over any action against any of the Entities exculpated pursuant to Section 12.02
of this Plan based upon any act or omission in connection with, or arising out
of, the Cases, the proposed confirmation or consummation of this Plan, or the
administration of the Cases or this Plan, or the property to be distributed
under this Plan.
10.04 Subordination Rights. The classification and treatment
of all Claims and Interests under this Plan shall be in full settlement and
satisfaction of any contractual, legal and equitable subordination rights,
whether arising under general principles of equitable subordination, section
510(c) of the Bankruptcy Code or otherwise, that a Holder of a Claim or Interest
may have against other Claim Holders with respect to any distribution made
pursuant to this Plan.
10.05 Effectuating Documents; Further Transactions; Timing.
The Proponents, the Debtors, and the Reorganized Debtors are authorized to
execute, deliver, file, or record such contracts, instruments, releases, and
other agreements or documents and to take such actions as may be necessary or
appropriate to effectuate and further evidence the terms and conditions of this
Plan. All transactions that are required to occur on the Effective Date under
the terms of this Plan shall be deemed to have occurred simultaneously. The Old
Notes Trustee shall deliver in recordable form all documents or instruments
reasonably requested by the Debtors or the Reorganized Debtors to cancel of
record all mortgages, liens, security interests and encumbrances on any
Collateral for the Old Notes.
10.06 Ratification of Actions Taken. Entry of the Confirmation
Order and the occurrence of the Effective Date shall ratify all transactions
effected by the Debtors and the Proponents from and including the Petition Date
through the Effective Date. After entry of the Confirmation Order, all Creditors
and Interest Holders shall be enjoined and restrained from commencing or
continuing any action or proceeding arising out of or related to the
consummation of the transactions contemplated by this Plan.
10.07 Modification of this Plan Subject to section 1127 of the
Bankruptcy Code, the Proponents may agree among themselves to amend or modify
this Plan, and remedy any defect or omission, or reconcile any inconsistency in
this Plan in such manner as may be necessary to carry out the purpose and intent
of this Plan. Every amendment or modification of this Plan shall supersede and
render null and void all prior versions of this Plan.
24
<PAGE>
10.08 Withdrawal of Proceedings by Old Notes Trustee. As of
the Confirmation Date, the Old Notes Trustee shall use its best efforts to
suspend any appeals or other proceedings then pending in connection with Orders
of the Bankruptcy Court. As of the Effective Date, the Old Notes Trustee shall
withdraw all such proceedings with prejudice.
ARTICLE 11
GOVERNANCE AFTER CONFIRMATION
11.01 Board of Directors. The Boards of Directors of the
Debtors existing prior to the Effective Date shall continue in place after the
Effective Date as directors of the Reorganized Debtors until the first meeting
of holders of New Common Stock. The first meeting of holders of New Common Stock
shall occur as soon as reasonably practicable after a total of not less than 3.5
million shares of New Common Stock has been issued and at least one Entity
entitled to receive New Common Stock has either been approved by the appropriate
regulatory bodies, the necessity for such approval has been waived, or approval
is not required under applicable law. At the first meeting of holders of New
Common Stock, such holders shall be entitled to elect the Board of Directors of
Reorganized Holdings. An entity that is not yet entitled to be issued New Common
Stock by reason of the Regulatory Conditions or otherwise shall have no rights
of a holder of New Common Stock, including the right to vote such shares, until
all Regulatory Conditions or other requirements have been satisfied and the New
Common Stock has been issued to the Entity. The Board of Directors of
Reorganized Holdings shall appoint the Boards of Directors of Reorganized GBHC
and Reorganized Funding.
11.02 Officers. The officers of the Debtors holding office
prior to the Effective Date shall continue in office unless changed by the
Boards of Directors of the Reorganized Debtors after the Effective Date, subject
to the Bankruptcy Court's Order of March 31, 1998, providing for severance
payments to certain officers.
11.03 No Corporate Action Required. As of the Effective Date,
the issuance of New Notes and New Common Stock, the adoption, execution,
delivery and implementation of all contracts, leases, documents, instruments,
and other agreements related to or contemplated by this Plan, and the other
matters provided for, under, or in furtherance of this Plan involving action to
be taken by or required of the Debtors or the Reorganized Debtors shall be
deemed to have occurred and be effective as provided herein, and shall be
authorized and approved in all respects without further order of the Bankruptcy
Court or any requirement of further action by stockholders or directors of the
Debtors or the Reorganized Debtors. All documents or instruments which must be
executed and
25
<PAGE>
delivered by the Debtors or the Reorganized Debtors under this Plan shall be
deemed appropriately executed if signed by either of the President, Chief
Executive Officer, Executive Vice President, or any Vice President of the
Debtors.
11.04 Powers and Duties of the Debtors. From and after the
Confirmation Date, the Debtors and the Reorganized Debtors shall have the powers
and exercise the duties, as set forth in section 1123(b)(3) of the Bankruptcy
Code, to retain, enforce, settle, and prosecute all Causes of Action.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.01 Exemption from Transfer Taxes. Pursuant to section
1146(c) of the Bankruptcy Code, the issuance, transfer or exchange of securities
or other property under this Plan; the creation, transfer, filing or recording
of any mortgage, deed of trust, financing statement or other security interest;
or the making, delivery, filing or recording of any deed or other instrument of
transfer under, in furtherance of, or in connection with this Plan, shall not be
subject to any stamp tax, real estate tax, conveyance, filing or transfer fees,
mortgage, recording or other similar tax, or other government assessment. All
recording officers and other entities whose duties include recordation of
documents lodged for recording shall record, file, and accept such documents
delivered under this Plan without the imposition of any charge, fee,
governmental assessment, or tax.
12.02 Exculpation. Neither the Debtors, nor the Proponents,
nor any of their officers, directors, members, employees, advisors, consultants,
attorneys, affiliates, or agents shall have or incur any liability to any Holder
of a Claim or Interest for any act or omission in connection with, or arising
out of, the Cases, the proposed confirmation or consummation of this Plan, the
administration of the Cases or this Plan, or the property to be distributed
under this Plan except for willful misconduct and gross negligence, and in all
respects shall be entitled to rely upon the advice of counsel with respect to
their duties and responsibilities under this Plan.
12.03 Permanent Injunction. Except as otherwise set forth in
this Plan, on and after the Effective Date all persons and entities that have
held, hold or may hold (a) any Claim against or Interest in the Debtors shall be
permanently enjoined from and against (i) commencing or continuing in any manner
any suit, action or other proceeding of any kind against the Debtors, the
Reorganized Debtors, or the Estates with respect to any such Claim or Interest
(ii) the enforcement, attachment, collection or recovery by any manner or means
of any judgment, award, decree or order against the Debtors, the Reorganized
Debtors, or the Estates, (iii) creating, perfecting or enforcing any lien or
26
<PAGE>
encumbrance of any kind against the Debtors, the Reorganized Debtors, or the
Estates or against any of their properties or interests in property with respect
to such Claim or Interest and (iv) asserting any right of setoff, subrogation or
recoupment of any kind against any obligation due from the Debtors, the
Reorganized Debtors, or against any property or interest in property of the
Debtors or the Reorganized Debtors with respect to any such Claim or Interest
and (b) any Claim, right, action, cause of action against or Interest in the
Debtors, the Reorganized Debtors, or the Estates shall be permanently enjoined
from and against commencing or continuing any suit, action or proceeding
against, asserting or attempting to recover any Claim against or Interest in, or
otherwise affecting the Debtors, the Reorganized Debtors, or the Estates with
respect to any matter that is the subject of this Plan.
12.04 Revocation or Withdrawal of the Plan. If the Proponents
revoke or withdraw this Plan, then this Plan shall be deemed null and void.
12.05 Binding Effect. This Plan shall be binding upon, and
shall inure to the benefit of, the Debtors, the Reorganized Debtors, the Holders
of all Claims and Interests, and their respective successors and assigns.
Confirmation of this Plan binds each of the Holders of Claims and Interests to
the terms and conditions of this Plan, whether or not such Holder has accepted
this Plan.
12.06 Construction. The rules of construction set forth in
section 102 of the Bankruptcy Code shall apply to construction of this Plan.
12.07 Time. In computing any period of time prescribed or
allowed by this Plan, unless otherwise set forth herein, the provisions of
Bankruptcy Rule 9006 shall apply.
12.08 Headings. The headings used in this Plan are inserted
for convenience only and neither constitute a portion of this Plan nor are
intended in any manner to affect any interpretation of the provisions of this
Plan.
12.09 Governing Law. Except to the extent that the Bankruptcy
Code or other federal law is applicable, the rights, duties and obligations of
any Entity arising under this Plan shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of New Jersey,
without regard to New Jersey choice of law provisions.
27
<PAGE>
12.10 Existence of Committee. The Committee shall continue in
existence until the Effective Date, upon which date the Committee shall be
disbanded.
12.11 Benefit Programs. As of the Confirmation Date, all
programs or plans maintained by the Debtors for the benefit of present or former
employees and dated on or before the Petition Date which have not been
previously terminated shall be continued in force and effect and assumed by the
Reorganized Debtors. Any Entity with a Claim arising from such termination shall
be treated as a Holder of a General Unsecured Claim.
12.12 Retiree Benefits. Except as otherwise provided in this
Plan, any obligations of the Debtors to any Entity for the purpose of providing
or reimbursing payments for retired employees and their spouses and dependents
for medical, surgical, or hospital care benefits, or benefits in the event of
sickness, accident, disability, or death under any plan, fund or program
(through the purchase of insurance or otherwise) maintained or established in
whole or in part by the Debtors prior to the Petition Date, if any, shall
continue in effect and be assumed by the Reorganized Debtors.
12.13 Payment of Statutory Fees. No later than the Effective
Date, the Debtors shall have paid all fees due to the United States Trustee
through the Effective Date. Such fees which accrue after the Effective Date and
until the Cases are closed shall be payable by the Reorganized Debtors.
12.14 Cramdown. At the Confirmation Hearing, the Proponents
may seek Confirmation of this Plan notwithstanding the rejection of this Plan by
any impaired Class of Creditors or Interest Holders.
12.15 Execution of Plan Documents Upon application by the
Proponents, the Court may issue an order directing any necessary party to
execute, deliver, or to join in the execution or delivery of an instrument or
document, and to perform any act necessary for the consummation of this Plan.
12.16 Post Consummation Effect Of Evidences Of Claims Or
Interests. Notes, stock certificates, and other evidence of Claims against or
Interests in the Debtors shall, effective on the Effective Date, represent only
the right to participate in the distributions contemplated by this Plan.
12.17 Successors and Assigns. The rights, benefits, and
obligations of any Entity named or referred to in this Plan shall be
28
<PAGE>
binding upon, and shall inure to the benefit of, the heir, executor,
administrator, successor, or assignee of such Entity.
12.18 Inconsistencies. In the event that there is any
inconsistency between this Plan and the Disclosure Statement, any exhibit to
this Plan, or any other instrument or document created or executed pursuant to
this Plan, this Plan shall govern.
12.19 Compliance With Applicable Law. It is intended that the
provisions of this Plan (including the implementation thereof) shall be in
compliance with applicable law, including, without limitation, the Bankruptcy
Code, the Securities Act of 1933, the Internal Revenue Code, and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, each as amended, as well
as any rules and regulations promulgated thereunder. If Proponents conclude that
this Plan may not comply with any of the foregoing, then the Proponents may
amend this Plan in such respects as they deem necessary to bring this Plan into
compliance therewith, subject to the provisions herein governing amendment of
this Plan.
12.20 Severability. Subject to section 1127 of the Bankruptcy
Code, if the Bankruptcy Court determines at the Confirmation Hearing that any
material provision of this Plan is invalid or unenforceable, such provision, to
the extent the Proponents agree, shall be severable from this Plan and null and
void, and, in such event, such determination shall in no way limit or affect the
enforceability or operative effect of any or all other portions of this Plan.
29
12.21 Post Confirmation Fees and Expenses The Debtors and the
Reorganized Debtors shall be authorized to pay the fees and expenses of any
professional retained by the Debtors accruing after the Confirmation Date in
accordance with the terms of engagement of such professional, and without the
need for a hearing or Bankruptcy Court order.
CYPRUS LLC
By:______________________________
Name:
Title:
LARCH LLC
By:______________________________
Name:
Title:
Official Committee of Unsecured Creditors
By Cooper Perskie April Niedelman
Wagenheim & Levenson
By: ____________________________
Eric A. Browndorf
Dated: April 7, 2000
30
<PAGE>
Exhibit D-2
[Letterhead of Icahn Associates Corp.]
February 15, 2000
To Whom It May Concern:
Reference is made to the First Amended Joint Plan of Reorganization (as the same
may be amended or modified) proposed by the official creditors committee and
High River (1) (the "Committee High River Plan") as well as the letter of even
date executed by Mr. Icahn. The undersigned is the Chief Financial Officer of
Icahn Associates. This will confirm that Mr. Icahn's personal net worth is in
excess of $1 billion and that he is possessed of sufficient liquid funds to
ensure that Cypress and Larch can meet their obligation under the High River
Stock Purchase Agreement.
Icahn Associates
By: /s/ Robert Mitchell
Robert Mitchel
Chief Financial Officer
(1) Capitalize terms not otherwise defined herein shall have the meanings
ascribed to them in the Committee/High River Plan.
<PAGE>
[Letterhead of Carl C. Icahn]
February 15, 2000
To Whom It May Concern:
Reference is made to the First Amended Joint Plan of Reorganization (as the same
may be amended or modified) proposed by the official creditors committee and
High River (1) (the "Committee High River Plan"). Please be advised that, as of
the Effective Date, I shall take whatever actions reasonably necessary to ensure
adequate funding of Cypress and Larch sufficient to meet their obligations under
the High River Stock Purchase Agreement.
Sincerely,
/s/ Carl C. Icahn
Carl C. Icahn
(1) Capitalize terms not otherwise defined herein shall have the meanings
ascribed to them in the Committee/High River Plan.
<PAGE>
Exhibit D-3
GLOBAL DEVELOPMENT PLAN 2000-2002
- Begin the process of acquiring the Post Office site.
-The process will take approximately 3+ years to negotiate an
agreement, relocate the operation, and clear the parcel and develop a 1,500
space parking garage and transportation center.
-The CRDA and the City of Atlantic City have been actively working with
the Sands in the past and have pledged to continue this process.
-The relocation of the Post Office will also allow the City to continue
its project of widening Martin Luther King, Jr. Boulevard, creating a better
access into the Sands facility.
-Acquire the Gold Store, Claridge Administration Building and Poseidon
Restaurant for purpose of clearing these lots and paving the way for the Pacific
Avenue Buildout.
-All cost except the cash payment ($1.5 million) for the Claridge
Building will be paid from internally generated cash.
-Develop and complete by July 1, 2002 the Pacific Avenue Buildout -
which will include:
-A 16 floor hotel tower with 200 new hotel rooms -20,000 square feet of
additional casino space -800 additional slot machines -Banquet ballroom
and retail public space -Combining the hotel lobby with the Pacific
Avenue Entrance -Connection availability, via a skywalk over Pacific
Avenue to the eventual parking garage on the Post Office site
<PAGE>
USES OF CASH
2000
- Acquire Claridge Building $ 1,500,000
2001
- Begin construction of Expansion to Pacific 20,000,000
Avenue (200 rooms, 16 floors, ballroom, banquet,
retail space, 20,000 square feet casino space,
800 additional slot machines)
2002
- Complete expansion to Pacific Avenue 34,000,000
(July 1, 2002)
-----------
$55,500,000
===========
NOTES
-CRDA Room Expansion Credits of at least $3 million are available to offset
total cost of this expansion. This has not been factored into above schedule, as
timing of reimbursement has not been finalized.
-Unsecured Creditors Disbursement at effective date will be a use of funds
invested for the equity purchased.
<PAGE>
GREATE BAY HOTEL AND CASINO, INC.
PROJECTED STATEMENTS OF OPERATIONS
MANAGEMENT FORECAST
(amounts in thousands)
Total-00P Total-01P Total-02P
--------- --------- ---------
Table Drop 466,072 470,637 480,656
--------- --------- ---------
Revenues:
Casino - table games 69,911 70,596 72,098
Casino - slots 165,722 174,058 195,296
Casino - poker 1,990 2,000 2,000
Casino - simulcast 1,080 1,200 1,200
Casino - keno -------- -------- -------
Casino revenues 238,703 247,854 270,595
Rooms 9,783 9,988 11,874
Food and Beverage 27,818 29,742 32,518
Other 3,524 3,500 3,500
-------- -------- -------
Gross revenues 279,828 291,085 318,487
Promotional
Allowances 21,982 23,441 25,907
-------- ------- -------
Net revenues 257,846 267,643 292,580
-------- ------- -------
Operating Expenses:
Payroll - salaries
and wages 69,901 71,607 75,862
Payroll - benefits
and taxes 23,413 23,630 25,005
Advertising
and promotion 21,950 23,034 24,450
Coin incentive
programs 36,956 38,668 41,109
Entertainment 933 1,000 1,000
Food and beverage
costs 10,243 10,930 11,951
Maintenance and
repairs 6,742 6,975 7,410
Operating supplies 4,778 4,950 5,306
Casino bad debt 2,144 2,118 2,168
Property and
<PAGE>
equipment rentals 3,147 3,200 3,401
Travel and
entertainment 168 175 175
Professional fees 988 1,000 1,000
Casino gaming tax 19,206 19,942 21,805
Regulatory costs 4,304 4,320 4,580
Insurance 1,764 1,863 2,012
Utilities 4,859 4,957 5,366
Property taxes 8,382 8,575 9,597
License fee for
Sands name 293 300 303
Other operating
expenses 5,201 5,358 5,718
------- ------ ------
Total operating
expenses 225,373 232,603 248,218
------- ------- -------
EBITDA 32,473 35,041 44,362
------- ------- -------
GREATE BAY HOTEL AND CASINO, INC.
PROJECTED STATEMENTS OF OPERATIONS
MANAGEMENT FORECAST
(amounts in thousands)
Total-00P Total-01P Total-02P
--------- --------- ---------
EBITDA (before
management fees) 32,473 35,041 44,362
Management fees
Timing differences
(accrual to cash
basis) (3,324) (600) (600)
CRDA deposits (2,948) (3,098) (3,295)
------ ------- -------
Cash flow before
capital
expenditures,debt
service and
<PAGE>
income taxes 26,201 31,343 40,467
Capital
expenditures (15,300) (10,500) (7,000)
Expansion (1,500) (25,500) (28,500)
---------- --------- --------
Cash flow before
debt service
and income taxes 9,401 (4,657) 4,967
Debt service (4,084) (9,799) (10,262)
------ ------ --------
Cash flow before
income taxes 5,317 (14,456) (5,295)
Income Taxes:
State (833) (1,696)
Federal (5,238) (4,492) (5,898)
Net cash flow 79 (19,781) (12,889)
Borrowings/
(repayments)
on credit
facilities
Net proceeds
(disbursements)
- restructuring (1) 55,600
------- ------- --------
--------------------------------------------------------------------------------
(1) Proceeds are net of among other things $5.4 million paid to the
Unsecured Creditors.
Net change in
cash 55,679 (19,781) (12,889)
Beginning cash
balance 20,897 76,576 56,795
-------- -------- -------
Ending cash
balance 76,576 56,795 43,906
<PAGE>
Exhibit D-4
GB Holdings, Inc. and Subsidiaries
Pro Forma Presentation of the Effects of The Plan
Using Estimated July 1, 2000 Balance Sheet
(In Thousands)
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
Estimated
Pre-Confirmation Post-Confirmation
Consolidated Consolidated
Balance Sheet Reorganization Fresh Start Balance Sheet
7/1/2000 Adjustments Adjustments 7/1/2000
------------------ ---------------- ------------------ --------------------
Current Assets $ 36,353 $ - $ 65,000 $ 101,353
Property and Equipment, net 166,217 - (36,502) 129,715
Obligatory Investments 9,218 - (2,024) 7,194
Other Assets 3,142 - (691) 2,451
9,287 9,287
Reorganization Value In Excess Of Amounts (29,930)
Allocable To Identifiable Assets - - 29,930 -
------------------ ------------- --------------- --------------------
Total Assets $ 214,930 $ - $ 35,070 $ 250,000
================== ============= =============== ====================
Current Liabilities $ 23,412 $ 5,250 $ - $ 28,662
Liabilities Subject To Compromise 217,028 (101,778) - -
(115,250)
Long-Term Debt 800 110,000 - 110,800
Deferred Taxes and Other Noncurrent
Liabilities 8,567 8,567
Common Stock 1 49 50 100
Additional Paid-In Capital 27,946 8,975 101,871
64,950
Accumulated Deficit (62,824) 101,778 - -
(49) (38,905)
------------------ ------------- --------------- --------------------
Total Liabilities and Shareholders' Equity $ 214,930 $ - $ 35,070 $ 250,000
================== ============= =============== ====================
</TABLE>
<PAGE>
GB Holdings, Inc. and Subsidiaries
Pro Forma Presentation of the Effects of The Plan of Reorganization
Using Estimated July 1, 2000 Assets & Liabilities
Tax Basis
(UNAUDITED)
(In Thousands)
<TABLE>
<S> <C> <C> <C>
(A)
Estimated
Pro Forma
Post Confirmation
Estimated ProForma Assets & Liabilities
Post Confirmation IRC Sec. 108 After IRC Sec.
Assets and Liabilities Reduction 108 Reduction
Tax Basis Tax Tax Basis
July 1, 2000 Basis July 1, 2000
------------------- ------------------- -------------------
Current Assets $ 108,291 $ 0 $ 108,291
Depreciable PP&E (Net) 94,623 (3,620) 91,003
Construction in Progress 2,295 (116) 2,179
Land 54,884 (2,766) 52,118
Obligatory Investments 16,053 (3) 16,050
Other Assets 14,699 (3) 14,696
------------------- ------------------- -------------------
Total Assets $ 290,845 $ (6,508) $ 284,337
=================== =================== ===================
Current Liabilities $ 28,662
Long Term Debt 110,800
Non Current Liabilites 8,567
-------------------
$ 148,029
===================
Maximum Basis $ 142,816
===================
Reduction Per
IRC Sec. 1017(b)(2)
</TABLE>
(A) Since the proposed effective date of the Plan of Reorganization is in
the Year 2000, the reduction of tax attributes caused by cancellation of
debt does not occur until 2001. This Pro Forma is prepared based
upon the tax attribute reduction as calculated at the time of
Reorganization applied to the Tax Basis Assets and Liabilites as of July 1,
2000.
<PAGE>
Exhibit D-5
SANDS HOTEL AND CASINO -
ANALYSIS OF THE COMMITTEE/HIGH RIVER PLAN
--------------------------------------------------------------------------------
VALUATION ANALYSIS RECOVERY - HIGH RIVER 65,000
--------------------------------------------------------------------------------
Estimated 2000 EBITDA 32,473 CURRENT PROJECTIONS
Multiple 5.30 5.80 6.30
Enterprise Value 172,107 188,343 204,580
Less Debt (110,000) (110,000) (110,000)
Plus Cash 60,640 60,640 60,640
------- ---------- ---------
Implied Equity Value 122,747 138,983 155,220
High River Ownership 46.25% 46.25% 46.25%
High River Value 56,770 64,280 71,789
High River Payment 65,000 65,000 65,000
------- --------- ---------
Premium to High River (8,230) (720) 6,789
DISCOUNT FOR HIGH RIVER -14.5% -1.1% 9.5%
% PREMIUM OVER PURCHASE PRICE -12.7% -1.1% 10.4%
Bondholder Ownership 53.75% 53.75% 53.75%
B/H Equity Value 65,976 74,704 83,431
B/H Bond Value 110,000 110,000 110,000
-------- -------- ---------
Total B/H Value 175,976 184,704 193,431
Less Secured Claim (110,000) (110,000) (110,000)
--------- ---------- ---------
Value to Unsecured Clm 65,976 74,704 83,431
Unsecured Claim Amount 99,832 99,832 99,832
% Recovery to unsecured ** 66% 75% 84%
** - Prior to the effect of subordination agreement
--------------------------------------------------------------------------------
RECOVERIES USING VALUE BASED UPON WHAT HIGH RIVER IS PAYING
--------------------------------------------------------------------------------
High River Ownership % 46.25%
High River Payment 65,000
-------
Implied Value of Total Equity 140,541
B/H Equity % 53.75%
B/H Equity Value 75,541
B/H Bond Value 110,000
-------
Total B/H Value 185,541
Less Secured Claim (110,000)
--------
Value to Unsecured Clm 75,541
Unsecured Claim Amount 99,832
% Recovery to unsecured ** 76%
** - Prior to subordination
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
Recovery Matrix using High Range Valuation - High River
-------------------------------------------------------
Post subord.
Pre-subord. Recovery Unsecured
Percentage Dollar Subordination After Percentage
Claim Amount Recovery Recovery Impact Subordination Recovery
General Unsecured Claims 6,700 80% 5,360 - 5,360 80%
----- --- ----- ------- ------ ---
Subordinated Claims 18,482 84% 15,446 (15,446) - 0%
Senior Note Claims - Others 53,366 84% 44,598 10,132 54,731 100%
Senior Note Claims - High River 27,984 84% 23,387 5,313 28,700 100%
------ ------ ----- ------
Total Bondholder-I / C Claims 99,832 83,431 - 83,431
Recovery Matrix using Valuation based on Payment
------------------------------------------------
General Unsecured Claims 6,700 80% 5,360 - 5,360 80%
----- --- ----- -----
Subordinated Claims 18,482 76% 13,985 (13,985) - 0%
Senior Note Claims - Others 53,366 76% 40,381 9,174 49,555 93%
Senior Note Claims - High River 27,984 76% 21,175 4,811 25,986 93%
------ ------ ------
Total Bondholder-I / C Claims 99,832 75,541 - 75,541
Recovery Matrix using Valuation based on average of Payment and High Range
--------------------------------------------------------------------------
General Unsecured Claims 6,700 80% 5,360 - 5,360 80%
------ --- ----- -----
Subordinated Claims 18,482 80% 14,715 (14,715) - 0%
Senior Note Claims - Others 53,366 80% 42,489 9,653 52,143 98%
Senior Note Claims - High River 27,984 80% 22,281 5,062 27,343 98%
------ ----- ------
Total Bondholder-I / C Claims 99,832 - 79,486
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit D-6
SANDS HOTEL AND CASINO -
----------------------
UNFAIR DISCRIMINATION ANALYSIS OF THE PARK PLACE PLAN
Recoveries using Park Place Valuation Analysis - Park Place
<TABLE>
<S> <C> <C> <C>
Estimated 2000 EBITDA 40,363
Multiple 5.30 5.80 6.30
Enterprise Value 213,924 234,105 254,287
Less Debt (128,000) (128,000) (128,000)
Plus Cash 28,800 28,800 28,800
---------- --------- --------
Implied Equity Value 114,724 134,905 155,087
Park Place Ownership 57.7% 57.7% 57.7%
Park Place Value 66,196 77,840 89,485
Park Place Payment 40,000 40,000 40,000
--------- -------- --------
Premium to Park Place 26,196 37,840 49,485
Discount for Park Place 39.6% 48.6% 55.3%
% Premium over Purchase Price 65.5% 94.6% 123.7%
Bondholder Ownership 42.3% 42.3% 42.3%
B/H Equity Value 48,528 57,065 65,602
B/H Bond Value 128,000 128,000 128,000
---------- -------- --------
Total B/H Value 176,528 185,065 193,602
Less Secured Claim (110,000) (110,000) (110,000)
----------- --------- ---------
Value to Unsecured Clm 66,528 75,065 83,602
Unsecured Claim Amount 99,832 99,832 99,832
% Recovery to unsecured** 67% 75% 84%
** Prior to the effect of subordination
agreement
</TABLE>
Recoveries using Value based upon what Park Place is Paying
<TABLE>
<S> <C> <C> <C>
IMPLIED BASED ON PAYMENT IMPLIED BASED ON EXCHANGE OPTION
------------------------ --------------------------------
Park Place Ownership 57.7%
Park Place Payment 40,000
-------
Implied Value of Total Equity 69,334 Repurchase offer 3.61
B/H Equity % 42.3% # of shares (000's) 4,230.80
------
B/H Equity Value 29,334 B/H Exchange Equity Value 15,273
B/H Bond Value 128,000 B/H Bond Value 128,000
----------- -------
Total B/H Value 157,334 Total B/H Value 143,273
Less Secured Claim (110,000) Less: Secured Claim (110,000)
------------ -----------
Implied Value to Unsecured Clm 47,334 Exch. Option value to unsec. 33,273
Unsecured Claim Amount 99,832 Unsecured Claim Amount 99,832
% Recovery to unsecured** 47% % Recovery to unsecured** 33%
**-Prior to subordination **-Prior to subordination
</TABLE>
<PAGE>
Recovery Matrix using High Range Valuation - Park Place
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Post subord.
Pre-subord. Recovery Unsecured
Percentage Dollar Subordination After Percentage
Claim Amount Recovery Recovery Impact Subordination Recovery
General
Unsecured
Claims 6,700 100% 6,700 - 6,700 100%
-------- ---- ------- --------- ----
Subordinated
Claims 18,482 84% 15,477 (15,127) 350 2%
Park Place
Undersecured 11,463 84% 9,600 1,831 11,431 100%
Senior Note
Undersecured 69,887 84% 58,525 13,296 71,821 100%
--------- --------- --------- ---------
Total Bondholder-
I/C Claims 99,832 83,602 - 83,602
Recovery Matrix using Valuation based on Payment
General
Unsecured
Claims 6,700 100% 6,700 - 6,700 100%
--------- ---- ------- ------- ----
Subordinated
Claims 18,482 47% 8,763 (8,413) 350 2%
Park Place
Undersecured 11,463 47% 5,435 855 6,320 55%
Senior Note
Claims 69,887 47% 33,136 7,528 40,664 58%
--------- -------- ------ ---------
Total Bondholder-
I/C Claims 99,832 47,334 - 47,334
Recovery Matrix using Valuation based on average of Payment and High Range
General
Unsecured
Claims 6,700 100% 6,700 - 6,700 100%
------- ---- ------ --------- ----
Subordinated
Claims 18,482 66% 12,120 (11,770) 350 2%
Park Place
Undersecured 11,463 66% 7,517 1,358 8,875 77%
Senior Note
Claims 69,887 66% 45,380 10,412 56,242 80%
--------- --------- -------- -------
Total Bondholder-
I/C Claims 99,832 65,468 - 65,468
</TABLE>
<PAGE>
Exhibit D-7
Park Place - Committee/High River Distribution Comparison Analysis
Recovery Matrix using High Range Valuation - Park Place
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Post subord.
Pre-subord. Recovery Unsecured
Percentage Dollar Subordination After Percentage
Claim Amount Recovery Recovery Impact Subordination Recovery
General
Unsecured
Claims 6,700 100% 6,700 - 6,700 100%
------- ---- ------- -------- ----
Subordinated
Claims 18,482 84% 15,477 (15,127) 350 2%
Park Place
Undersecured 11,463 84% 9,600 1,831 11,431 100%
Senior Note
Undersecured 69,887 84% 58,525 13,296 71,821 100%
--------- --------- -------- ------
Total Bondholder-
I/C Claims 99,832 83,602 - 83,602
Recovery Matrix using Valuation based on Payment
General
Unsecured
Claims 6,700 100% 6,700 - 6,700 100%
------- ---- ----- ------- ----
Subordinated
Claims 18,482 47% 8,763 (8,413) 350 2%
Park Place
Undersecured 11,463 47% 5,435 855 6,320 55%
Senior Note
Claims 69,887 47% 33,136 7,528 40,664 58%
--------- --------- ----- ------
Total Bondholder-
I/C Claims 99,832 47,334 - 47,334
Recovery Matrix using Valuation based on average of Payment and High Range
General
Unsecured
Claims 6,700 100% 6,700 - 6,700 100%
------- ---- ----- ------- ----
Subordinated
Claims 18,482 66% 12,120 (11,770) 350 2%
Park Place
Undersecured 11,463 66% 7,517 1,358 8,875 77%
Senior Note
Claims 69,887 66% 45,830 10,412 56,242 80%
--------- --------- --------- -------
Total Bondholder-
I/C Claims 99,832 65,468 - 65,468
</TABLE>
<PAGE>
Park Place - Committee/High River Distribution Comparison Analysis
Recovery Matrix using High Range Valuation - High River
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Post subord.
Pre-subord. Recovery Unsecured
Percentage Dollar Subordination After Percentage
Claim Amount Recovery Recovery Impact Subordination Recovery
General
Unsecured
Claims 6,700 80% 5,360 - 5,360 80%
------- --- --------- ------- ----
Subordinated
Claims 18,482 84% 15,446 (15,446) - 0%
Senior Note
Claims - Others 53,366 84% 44,598 10,132 54,731 100%
Senior Note Claims
- High River 27,984 84% 23,387 5,313 28,700 100%
------- --------- ------- -------
Total Bondholder-
I/C Claims 99,832 83,431 - 83,431
Recovery Matrix using Valuation based on Payment
General
Unsecured
Claims 6,700 80% 5,360 - 5,360 80%
------- ---- ------ --------- ------
Subordinated
Claims 18,482 76% 13,985 (13,985) - 0%
Senior Note
Claims - Others 53,366 76% 40,381 9,174 49,555 93%
Senior Note Claims
- High River 27,984 76% 21,175 4,811 25,986 93%
-------- --------- ------- -------
Total Bondholder-
I/C Claims 99,832 75,541 - 75,541
Recovery Matrix using Valuation based on average of Payment and High Range
General
Unsecured
Claims 6,700 80% 5,360 - 5,360 80%
--------- --- ----- ------ ----
Subordinated
Claims 18,482 80% 14,715 (14,715) - 0%
Senior Note
Claims - Others 53,366 80% 42,489 9,653 52,143 98%
Senior Note Claims
- High River 27,984 80% 22,281 5,062 27,343 98%
--------- --------- ------
Total Bondholder
-I/C Claims 99,832 - 79,486
</TABLE>
<PAGE>
Park Place - Committee/High River Valuation Comparison
Recoveries using Park Place Valuation Analysis - Park Place
<TABLE>
<S> <C> <C> <C>
Estimated 2000 EBITDA 40,363
Multiple 5.30 5.80 6.30
Enterprise Value 213,924 234,105 254,287
Less Debt (128,000) (128,000) (128,000)
Plus Cash 28,800 28,800 28,800
---------- --------- ---------
Implied Equity Value 114,724 134,905 155,087
Park Place Ownership 57.7% 57.7% 57.7%
Park Place Value 66,196 77,840 89,485
Park Place Payment 40,000 40,000 40,000
--------- --------- --------
Premium to Park Place 26,196 37,840 49,485
Discount for Park Place 39.6% 48.6% 55.3%
% Premium over Purchase Price 65.5% 94.6% 123.7%
Bondholder Ownership 42.3% 42.3% 42.3%
B/H Equity Value 48,528 57,065 65,602
B/H Bond Value 128,000 128,000 128,000
---------- -------- -------
Total B/H Value 176,528 185,065 193,602
Less Secured Claim (110,000) (110,000) (110,000)
----------- --------- ---------
Value to Unsecured Clm 66,528 75,065 83,602
Unsecured Claim Amount 99,832 99,832 99,832
% Recovery to unsecured** 67% 75% 84%
** Prior to the effect of subordination
agreement
</TABLE>
<TABLE>
<S> <C> <C>
Recoveries using Value based upon what Park Place is Paying
Implied Based on Payment Implied Based on Exchange Option
------------------------ --------------------------------
Park Place Ownership% 57.7%
Park Place Payment 40,000
------
Implied Value of Total Equity 69,334 Repurchase offer 3.61
B/H Equity % 42.3% # of shares (000's) 4,230.80
-------
B/H Equity Value 29,334 B/H Exchange Equity Value 15,273
B/H Bond Value 128,000 B/H Bond Value 128,000
-------- ---------
Total B/H Value 157,334 Total B/H Value 143,273
Less Secured Claim (110,000) Less: Secured Claim (110,000)
------------ ------------
Implied Value to Unsecured Clm 47,334 Exch. Option value to unsec. 33,273
Unsecured Claim Amount 99,832 Unsecured Claim Amount 99,832
% Recovery to unsecured** 47% % Recovery to unsecured** 33%
** Prior to subordination ** Prior to subordination
</TABLE>
<PAGE>
Park Place - Committee/High River Valuation Comparison
<TABLE>
<S> <C> <C> <C>
Valuation Analysis Recovery - High River 65,000
Estimated 2000 EBITDA 32,473 Current Projections
Multiple 5.30 5.80 6.30
Enterprise Value 172,107 188,343 204,580
Less Debt (110,000) (110,000) (110,000)
Plus Cash 60,640 60,640 60,640
---------- --------- -----------
Implied Equity Value 122,747 138,983 155,220
High River Ownership 46.25% 46.25% 46.25%
High River Value 56,770 64,280 71,789
High River Payment 65,000 65,000 65,000
---------- --------- ------------
Premium to High River (8,230) (720) 6,789
Discount for High River - 14.5% - 1.1% 9.5%
% Premium over Purchase Price - 12.7% - 1.1% 10.4%
Bondholder Ownership 53.75% 53.75% 53.75%
B/H Equity Value 65,976 74,704 83,431
B/H Bond Value 110,000 110,000 110,000
---------- -------- ----------
Total B/H Value 175,976 184,704 193,431
Less Secured Claim (110,000) (110,000) (110,000)
----------- --------- ----------
Value to Unsecured Clm 65,976 74,704 83,431
Unsecured Claim Amount 99,832 99,832 99,832
% Recovery to unsecured** 66% 75% 84%
** Prior to the effect of subordination
agreement
</TABLE>
Recoveries using Value based upon what High River is Paying
High River Ownership 46.25%
High River Payment 65,000
------
Implied Value of Total Equity 140,541
B/H Equity % 53.75%
---------
B/H Equity Value 75,541
B/H Bond Value 110,000
-------
Total B/H Value 185,541
Less Secured Claim (110,000)
----------
Value to Unsecured Clm 75,541
Unsecured Claim Amount 99,832
% Recovery to unsecured** 76%
** Prior to subordination
<PAGE>
-------------------------------------------------------------------------------
SANDS HOTEL AND CASINO POST CONFIRMATION CASH ANALYSIS
--------------------------------------------------------------
CASH BALANCE POST CONFIRMATION
--------------------------------------------------------------
PPE HR
------- --------
Cash at 3/31/00 18,000 18,000
Cage & WC Needs (13,000) (13,000)
Cash Contribution 40,000 65,000
Pmnt to Convenience/ unsecured (6,700) (5,360)
Pmnt to current profs (3,000) (3,000)
Other Admin Claims (1,000) (1,000)
Pmnt to ML/PP profs (2,000) -
Cost to convert signage (3,500) -
------- --------
--------------------------------------------------------------
Cash balance post confirmation ** 28,800 60,640
--------------------------------------------------------------
** - Post confirmation cash balance for the PPE Plan does not relect adjustments
for severence payments estimated at approximately $1.7 million.
--------------------------------------------------------------------------------
