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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 31, 1996
FITZGERALDS GAMING CORPORATION
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(Exact name of registrant as specified in its charter)
NEVADA
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(State or other jurisdiction of incorporation)
0-26518 88-0329170
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(Commission File Number) (IRS Employer Identification No.)
301 FREMONT STREET, LAS VEGAS, NEVADA 89101
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (702) 388-2400
NA
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Fitzgeralds Reno, Inc. ("FRI"), a wholly owned subsidiary of
Fitzgeralds Gaming Corporation (the "Company"), is indebted to, among others (i)
an individual in connection with the acquisition of Fitzgeralds Reno, pursuant
to a promissory note the principal amount of which approximated $18,000,000 at
December 31, 1996, collateralized by a second deed of trust on Fitzgeralds Reno
(the "Fitzgeralds Reno Note") and (ii) another individual in connection with the
repurchase of common stock, pursuant to a promissory note the principal amount
of which approximated $5,700,000 at December 31, 1996, collateralized by a third
deed of trust on Fitzgeralds Reno (the "Stockholder Note"). On June 18, 1996,
the holder of the Stockholder Note notified FRI that it was in default under the
third deed of trust securing the Stockholder Note by reason of its failure to
make the installment payment due thereunder on June 1, 1996. In response, FRI
provided the holder of the Stockholder Note with certain information which FRI
contends evidenced that the default in payment resulted from insufficient cash
flow; accordingly, any foreclosure proceeding with respect to Fitzgeralds Reno
was required to be delayed for up to 12 months, under specified circumstances,
until not later than June 18, 1997, although any default would not have been
cured. The holder of the Stockholder Note disputed FRI's contention that the
information furnished was sufficient to require a delay of any foreclosure
proceedings. On September 9, 1996, the holder of the Stockholder Note notified
FRI that on September 4, 1996 it had filed and recorded in Washoe County, Nevada
a Notice of Breach and Default and of Election to Cause Sale of Real Property
Under Deed of Trust (the "Foreclosure Notice"). Pursuant to the Foreclosure
Notice, the holder of the Stockholder Note declared the entire amount owing
under the Stockholder Note to be immediately due and payable and started FRI's
35-day statutory reinstatement period. Although FRI disputed, among other
things, the validity of the Foreclosure Notice, on October 14, 1996, FRI and the
holder of the Stockholder Note agreed, in consideration of the payment by FRI of
$48,293, to extend FRI's statutory reinstatement period through November 13,
1996, if the Foreclosure Notice was valid. Although the holder of the
Stockholder Note has subsequently refrained from noticing any foreclosure sale
of Fitzgeralds Reno or otherwise pursuing the foreclosure proceedings, there
have been no further written extensions of the reinstatement period and the
statutory three-month period between the recording of the Foreclosure Notice and
the date on which a foreclosure sale could be held has expired. Absent a waiver
or other resolution, FRI believes that the holder of the Stockholder Note may be
able to commence a foreclosure proceeding as early as June 18, 1997.
FRI and the holder of the Stockholder Note are continuing to discuss a
resolution of the situation, and FRI is hopeful that it will be able to reach a
satisfactory resolution. As of May 30, 1997, FRI was approximately $972,000 in
arrears on the Stockholder Note and the entire amount owing thereon was
approximately $6,200,000.
As disclosed in the Company's Form 10-K/A for the fiscal year ended
December 31, 1996, FRI had made interest and partial principal payments on the
Fitzgeralds Reno Note since March 1996 and, as of December 31, 1996, was
approximately $886,000 in arrears on such note. As of May 30, 1997, FRI was
approximately $1,500,000 in arrears on the Fitzgeralds Reno Note. Although the
holder of the Fitzgeralds Reno Note has not declared the note in default or
commenced foreclosure proceedings, the holder of the Fitzgeralds Reno Note has
not waived any rights with respect thereto.
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As a result, the Company classified the entire principal amount of the
Fitzgeralds Reno Note, approximately $18,000,000, as current as of December 31,
1996.
As a result of the foregoing, an event of default may exist under the
terms of the Note Purchase Agreement, dated as of December 30, 1996 (the "Note
Purchase Agreement"), pursuant to which $5,882,000 principal amount of the
Company's 13% Priority Secured Notes Due December 31, 1998 (the "Priority
Notes") were issued. Such event of default may exist under Section 8.1(4) of the
Note Purchase Agreement because of certain statements, representations or
warranties made in Section 4 of the Note Purchase Agreement which may have been
inaccurate, untrue or misleading in some material respect when made by reason of
the foregoing. In addition, the facts and circumstances concerning the
Stockholder Note and the Fitzgeralds Reno Note which are described herein were
not disclosed in the Company's Form 10-Q for the quarter ended June 30, 1996 or
in its Form 10-Q for the quarter ended September 29, 1996 which, among other
documents, was attached as an exhibit to the Company's Solicitation of Consents,
dated December 23, 1996, of the holders of its Senior Secured Notes in
connection with the issuance of the Priority Notes. The holders of the Priority
Notes and Senior Secured Notes have been notified of such facts and
circumstances concurrently with the filing of this Form 8-K. If the event of
default under Section 8.1(4) of the Note Purchase Agreement is not waived by the
holders of a majority in principal amount of the Priority Notes, the holders of
a majority in principal amount of the Priority Notes may declare the Priority
Notes to be immediately due and payable in accordance with the terms of the Note
Purchase Agreement.
The Company is the Issuer, and FRI is a Subsidiary Guarantor, under an
Indenture, dated as of December 19, 1995, as supplemented by the first
Supplemental Indenture, dated as of December 30, 1996 (collectively, the
"Indenture"), among the Company, as issuer, the Subsidiary Guarantors (as
defined in the Indenture) and BNY Western Trust Company, as successor to Wells
Fargo Bank, N.A. (formerly First Interstate Bank of Nevada, N.A.), as Trustee.
Pursuant to the Indenture, the Company issued $123,000,000 aggregate principal
amount of 13% Senior Secured Notes Due 2002 With Contingent Interest. An event
of default under the Note Purchase Agreement constitutes an Event of Default
under Section 501(e) of the Indenture. Section 1009(b) of the Indenture requires
that the Company provide an Officers' Certificate to the Trustee within three
Business Days after the Company becomes aware of the occurrence of any event,
notice or action requiring an Officers' Certificate. An Officers' Certificate
has been provided to the Trustee. If the holders of a majority in principal
amount of the Senior Secured Notes do not similarly waive such event of default,
the Trustee or the holders of not less than 25% in principal amount of the
outstanding Senior Secured Notes may declare the Senior Secured Notes to be
immediately due and payable in accordance with the terms of the Indenture. In
addition, an event of default under the Note Purchase Agreement and, therefore,
the Indenture would, unless cured or waived, constitute events of default under
other agreements pursuant to which the Company is indebted for borrowed money or
otherwise.
The Company is currently discussing with the respective holders of the
Stockholder Note and the Fitzgeralds Reno Note arrangements to cure any defaults
thereunder and, although there can be no assurance, it hopes to reach a
satisfactory resolution prior to June 30, 1997. If such negotiations are
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concluded successfully, the Company would then seek permanent waivers to cure
any remaining technical defaults.
The Company intends to prepare and file as promptly as possible
amendments to its Form 10-K/A for the fiscal year ended December 31, 1996 and
Form 10-Q for the quarter ended March 30, 1997 which will address such facts and
circumstances.
SIGNATURE
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 thereunto duly authorized.
FITZGERALDS GAMING CORPORATION
(Registrant)
June , 1997 By: /s/ FERNANDO BENSUASKI
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Date Fernando Bensuaski
Executive Vice President,
Chief Financial Officer and Secretary
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