We are excited at the prospect of acquiring the rest of the Company’s equity and believe our Proposal represents full and fair value to the Company’s stockholders. However, we also believe—and it is incumbent upon all stakeholders to recognize—that the Company’s stock no longer trades based on the performance or prospects of the Company’s underlying business and is being supported by Kien Huat’s financial support of the Company and speculation regarding a potential acquisition.
Our Proposal assumes (a) 34,413,459 shares of Common Stock outstanding, of which 28,914,606 shares are owned by Kien Huat and are expected to remain outstanding following the Merger; (b) 44,528 shares of Series B Preferred Stock outstanding; (c) 740 shares of Series F Preferred Stock, par value $0.01 (the “Series F Preferred Stock”) all of which are owned by Kien Huat and are expected to remain outstanding following the Merger; (d) outstanding warrants to purchase (i) 60,000 shares of Common Stock at an exercise price of $81.50 per share and (ii) 133,334 shares of Common Stock at an exercise price of $30 per share (together, the “Warrants”); (e) 443,000 restricted stock units (“RSUs”) outstanding; (f) except for the Common Stock, the Series B Preferred Stock, Series F Preferred Stock, RSUs and the Warrants (which we expect would be cancelled upon the Merger), no other equity securities or rights to acquire equity securities of the Company are outstanding; and (g) that the Company’s total indebtedness is less than $559,899,000. We intend to finance the Merger with cash provided by Kien Huat and Genting Malaysia or their respective affiliated entities.
As described in the Prior Letter, and consistent with the letter agreement between Kien Huat and the Company, dated February 17, 2016, which was amended on December 28, 2017, the Merger contemplated by our Proposal would be subject to the approval of (i) the Special Committee or another committee of the board of directors of the Company (the “Board”) composed solely of disinterested members of the Board who are also independent of Kien Huat and its affiliates (including Genting Berhad, Genting Malaysia and their subsidiaries) and (ii) holders of a majority of the votes represented by the outstanding shares of Common Stock and Series B Preferred Stock (together with any other capital stock of the Company entitled to vote together with the Common Stock in the election of the board of directors of the Company, “Voting Stock”) other than Voting Stock owned by Kien Huat, Genting Malaysia, or their affiliates and associates and executive management.
The Merger would also be subject to, among other things: (a) the completion of due diligence, including financial, legal, accounting, tax and business and operations diligence, with results satisfactory to us in our sole discretion; (b) the negotiation and execution of mutually acceptable definitive transaction documentation; (c) successfully obtaining all required or advisable regulatory approvals including, without limitation, any required approvals under the New York State Gaming Commission; (d) satisfaction of any other applicable regulatory or stock exchange requirements and (e) such other terms and conditions as are usual and customary in comparable transactions.
In considering our Proposal, please be aware that we have no interest in selling any equity of the Company to any other party nor would we expect, as a Company stockholder, to vote in favor of, or otherwise support, any alternative transactions, including a sale, merger or similar transaction involving the Company.
This letter and our Proposal arenon-binding, do not constitute an offer capable of acceptance or other binding commitment or obligation and we may terminate discussions regarding our Proposal, the Merger or any other transaction at any time and for any or no reason. No commitment, including any obligation to negotiate, shall arise with respect to our Proposal, the Merger or any other transaction unless and until such time as definitive agreements with respect to our Proposal, the Merger or other transaction are executed and delivered by the parties thereto, and then only to the extent set forth in such definitive agreements.
Due to Kien Huat’s obligations under the federal securities laws, Kien Huat intends to promptly file an amendment to Kien Huat’s Schedule 13D, including a copy of this letter, with the Securities and Exchange Commission.
