SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 19, 1997 (November 12, 1997)
AMERICAN BINGO & GAMING CORP.
(Exact name of Registrant as specified in charter)
Delaware 0-13530 74-2723809
(State or other jurisdic- (Commission (IRS Employer
tion of incorporation) File Number) Identification No.)
515 Congress Avenue, Suite 1200, Austin, TX 78701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 472-2041
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Item 2. Acquisition or Disposition of Assets
On November 12, 1997, American Bingo & Gaming Corp. ("Registrant") entered
into an agreement to acquire Darlington Music Co., a South Carolina video gaming
business ("Darlington"). The acquisition ("Acquisition") will be consummated in
a stock-for-stock transaction, with the Registrant exchanging 1,000,000 shares
of the Registrant's Common Stock for 100% of the issued and outstanding capital
stock of Darlington. There is no cash consideration. Based on its due diligence,
the Registrant believes that Darlington will generate more than $4 million in
revenues and $1,000,000 in free cash flow in 1997. Since the Registrant will
account for the Acquisition as a pooling of interests, Darlington's historical
financial results will be combined with the Registrant's financial results. The
Acquisition closed on December 18, 1997.
Darlington was founded in 1938 by George Harrison Sr., and is today owned
and operated by his three sons George Harrison, Jr., Thomas Harrison and William
Harrison (collectively, the "Harrisons"), and Michael Mims, Vice President -
Gaming ("Mims"), who together, will continue to operate the business.
The Acquisiton involves consideration in excess of 10% of the Registrant's
total assets. The Registrant will file, by amendment to this Form 8-K, the
required financial statements and exhibits within 60 days of the date of this
Report.
Voting Agreement
Pursuant to the Acquisition, the Harrisons, Mims and Gregory Wilson, the
Registrant's Chief Executive Officer and President ("Wilson"), will enter into a
voting agreement ("Agreement") providing for (i) the expansion of the Board of
Directors to seven directors, four of which will be nominated by Wilson, one to
be nominated by Mims, one to nominated by the Harrisons and one to be jointly
nominated by the Harrisons and Mims. The Agreement will terminate upon the
following occurrences: (i) for Wilson, when he no longer owns at least 126,000
shares of voting stock of the Registrant (Wilson currently owns approximately
1,260,000 shares); (ii) for Mims, when he no longer owns at least 82,768 shares
(Mims currently owns approximately 727,680 shares; and (iii) for the each
Harrison, when that Harrison no longer owns 33,333 shares (each Harrison
currently owns approximately 333,333 shares).
Item 5. Other Events.
In early December 1997, the Office of the Attorney General for the State of
South Carolina issued an "Advisory" ("Advisory") regarding the intended
prosecution of video gaming payouts as violative of state criminal laws against
lotteries. The Advisory stated that, in the opinion of the Attorney General,
video poker payoffs constitute a lottery and are illegal under South Carolina
law. The Advisory further stated that as of December 15, 1997, all South
Carolina law enforcement officers and prosecuting agencies were to be authorized
to enforce the
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lottery statutes through seizure of video gaming machines and arrests.
Shortly thereafter, the Attorney General reversed this position in a public
statement. He stated that he had no present intention to prosecute video gaming
operators under State law, but would instead join a class action civil suit
filed by an individual targeting video gaming operaters. Such civil suit is
likely to test the legality of video gaming under South Carolina law. The
Registrant's South Carolina subsidiaries could be added as defendants at any
time in such action. There has been editorial comment in local newspapers
strongly urging the State legislature to address this issue by either abolishing
video gaming in its entirety or instituting stronger regulations governing the
operations of video gaming, including heavier taxes.
Should South Carolina legislatively abolish its video gaming industry, the
Registrant's video gaming operations would be substantially, detrimentally and
materially impacted. Should South Carolina institute extensive regulations
governing the operations of video gaming, the Registrant's operations could be
materially impacted. The Registrant believes that responsible regulation could
be beneficial to the Company's operations, since settled regulatory structures
provide a basis for stability in operating businesses which are under their
umbrella. The Registrant currently derives over 50% of its revenues from its
South Carolina video gaming operations.
Item 7. Financial Statements
(a) It is currently impracticable for the Registrant to file the required
financial statements for the acquisition described in Item 2 of this
Current Report on Form 8-K. The Registrant intends to file such financial
statements as soon as they are available by amending this Current Report.
(b) It is currently impracticable for the Registrant to file the Pro-Forma
condensed balance sheet and statement of income and explanatory notes,
giving effect to the combined accounts of the Registrant and Darlington as
required by the instructions to Form 8-K. The Registrant intends to file
such Pro Forma financial statements as soon as they are available by
amending this Current Report.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN BINGO & GAMING CORP.
(Registrant)
December 19, 1997 By: s\ John T. Orton
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John T. Orton, CFO
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