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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: June 25, 1998
Commission file number 33-75806
CAPITOL QUEEN & CASINO, INC.
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(Exact name of registrant as specified in its charter)
Nevada 43-1652885
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
740 S. Decatur
Las Vegas, Nevada 89107
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(Address of principal (Zip Code)
executive offices)
(702) 258-5200
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On November 14, 1997, Arizona Charlie's, Inc. ("AC"), an
affiliate of Capitol Queen & Casino, Inc. the "Company" filed a voluntary
petition under Chapter 11 of the United States Bankruptcy Code (Case No.97-28781
LBR) with the United States Bankruptcy Court for the District of Nevada (the
"Bankruptcy Court") in Las Vegas, Nevada. At a confirmation hearing on June 25,
1998, the Bankruptcy Court confirmed the "Consensual Plan of Reorganization
Proposed by the Debtor and High River" dated June 24, 1998 (the "Consensual
Plan"), which was proposed jointly by: (i) AC; and (ii) High River Limited
Partnership ("High River"). High River is the holder of over 50% of the
outstanding 12% First Mortgage Notes issued by AC in the original amount of
$55,000,000 on or about November 15, 1993 (the "AC Notes"). The Consensual Plan
has been filed as an exhibit to AC's current report on Form 8-K dated June 25,
1998.
Previously, three competing plans of reorganization had been
proposed in this case -- a plan proposed by AC (the "AC Plan"), a plan proposed
by High River (the "High River Plan"), and a plan proposed by Fertitta
Enterprises and Station Casinos, Inc. (the "Fertitta Plan") (collectively, the
"Prior Plans"). Shortly before a confirmation trial on the three competing Prior
Plans was scheduled to commence on June 18, 1998, AC and High River entered into
a settlement agreement which formed the basis for the Consensual Plan. The
Consensual Plan represents an amalgamation and melding of portions of the AC
Plan and the High River Plan which had been accepted by creditors and parties in
interest in the case.
As confirmed by the Bankruptcy Court, the Consensual Plan allows
AC to reorganize its business affairs and continue as a going concern. The
Consensual Plan contemplates two scenarios: (i) the "Financing Option", under
which AC and its current principals will continue to own, manage, and operate
AC's business -- Arizona Charlie's Hotel & Casino (the "Casino"); or (ii) the
"Debt Conversion Option", under which the ownership, management, and operation
of the Casino will be transferred to High River.
AC generally has through July 31, 1998 to close proposed new
financing that will fund payments to creditors under the Financing Option of the
Consensual Plan. AC has obtained a financing commitment from United Healthcare
Financial Services, LLC ("UHFS") that would provide AC the financing it needs to
fund the Financing Option. Moreover, to facilitate the Consensual Plan, AC's
shareholder (Becker Gaming, Inc.), which is also the majority shareholder of the
Company, will provide AC with a $1.5 million new cash equity contribution, and
AC's affiliates will waive substantial claims (over $7 million) against AC. AC
has indicated that it expects the new financing from UHFS to close on or before
July 24, 1998, thus allowing the Financing Option of the Consensual Plan to
proceed but there can be no assurances in that regard.
Under the Financing Option, all non-insider creditors are to
receive full payment of their claims under the terms provided in the Consensual
Plan, except for the holders of the AC Notes and the holders of 12% First
Mortgage Notes issued by the Company in the original amount of $40 million on or
about November 15, 1993 (the "CQC Notes") that have asserted an unsecured claim
against AC based on AC's limited guaranty of the CQC Notes (the "CQC Noteholders
Guaranty Claims"). The claims of the holders of the AC Notes are satisfied in
full by up-front cash payments totaling $61,600,000 plus a portion of the $1.5
million new value contribution. The holders of the CQC Noteholders Guaranty
Claims receive an aggregate up-front cash payments totaling $1.5 million plus a
portion of the $1.5 million new value contribution in full satisfaction of those
claims against AC as a limited guarantor of the CQC Notes.
The Debt Conversion Option of the Consensual Plan will apply if
either: (i) by July 31, 1998, AC has not closed a new financing so that it has
cash available sufficient to make the payment of $61,600,000 to the holders of
the AC Notes; or (ii) by July 24, 1998, AC has not received the $1.5 million new
cash equity contribution from its sole shareholder. Under the Debt Conversation
Option, other than the holders of the AC Notes, creditors would receive the same
treatment as under the Financing Option. The holders of the AC Notes, other than
High River, would receive a cash payment from High River in the amount of $960
per $1,000 of aggregate principal amount of the AZC Notes owned. In addition,
all of the existing shares of AC stock would be canceled, and 100% of the new
stock of AC as reorganized would be issued to High River. As a result, the
Company would no longer have an equity interest in AC and High River would
become the sole shareholder of the reorganized AC.
Item 7: Financial Statements and Exhibits on Form 8-K
No exhibits are included herein:
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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 thereunto duly authorized.
Capitol Queen & Casino, Inc.
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(Registrant)
Date: July 10, 1998 /S/ Bruce F. Becker
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Bruce F. Becker
President, Chief Executive
Officer (Principal Executive
Officer) and Sole Director
Date: July 10, 1998 /S/ Jerry Griffis
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Jerry Griffis
Controller (Principal Financial and
Accounting Officer)