41295748.02
CONFIDENTIAL
PRESENTATION
TO THE
INDEPENDENT COMMITTEE
OF THE
BOARD OF DIRECTORS
OF
GB HOLDINGS, INC.
July 14, 2003
The information contained herein is of a confidential nature and is intended for
the exclusive use of the persons or firms to whom it is furnished by us.
Reproduction, publication, or dissemination of all or any portion hereof may not
be made without prior approval of Libra Securities, LLC.
[LIBRA SECURITIES, LLC LOGO]
LIBRA SECURITIES, LLC
126 East 56th Street, Fifth Floor, New York, NY 10022
T (212) 308-4060 F (212) 308-8925
GB HOLDINGS, INC.
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
PAGE
-------
1. Summary of Engagement.................................................................................... 1
2. GB Holdings Overview..................................................................................... 3
3. Summary of Proposed Exchange Offer....................................................................... 5
4. Summary of Valuation Ranges.............................................................................. 7
5. Selected Public Trading Comparables & Precedent Transactions............................................. 8
6. Discounted Cash Flow Analysis............................................................................ 9
7. Issues Facing New Jersey Casinos......................................................................... 12
8. Opinion Summary.......................................................................................... 13
9. Statement of Contingent and Limiting Conditions.......................................................... 14
Appendices:
A. Selected Historical Financial Statements
B. Selected Non-Nevada Single Property Gaming Transactions Less Than $300 Million
C. Additional Precedent Gaming Transactions
1. GB HOLDINGS, INC.
SUMMARY OF ENGAGEMENT
- --------------------------------------------------------------------------------
PURPOSE OF ENGAGEMENT
o Libra Securities, LLC ("Libra") has been retained by the Independent
Committee of the Board of Directors of GB Holdings, Inc. ("GB Holdings"
or the "Parent").
o The Parent, through its Greate Bay Hotel and Casino, Inc. subsidiary
("Operating"), owns and operates the Sands Casino and Hotel (the "Sands")
located in Atlantic City, New Jersey.
o The Parent, through its GB Property Funding Corp. subsidiary ("Finance"),
issued $110.0 million of 11% notes due September 29, 2005 (the "Existing
Notes"). (Parent, Operating and Finance, taken together, are referred to
herein as the "Company".)
o Libra has been engaged to provide (i) an opinion to the Committee as to
the fairness from a financial point of view of the consideration to be
received by the common stockholders of the Parent (the "Fairness
Opinion") in the transaction (the "Transaction") described in Section 3
hereto and (ii) a TIA Opinion (the "TIA Opinion", and with the Fairness
Opinions, the "Opinions")) to be delivered to the Trustee of the Existing
Notes if required pursuant to Section 314(d)(1) of the Trust Indenture
Act of 1939, as amended.
o The following presentation is a summary of Libra's analysis in connection
with the Fairness Opinion. It is our understanding that the TIA Opinion
will be delivered at the closing of the Transaction and therefore will be
based on our analysis at that time.
DUE DILIGENCE
o Due diligence activities carried out as part of our analysis:
1. Met with representatives and attorneys for the Independent
Committee and certain members of the senior management of the
Parent to discuss the operations, financial condition, future
prospects, projected operations and performance of the Company and
the pending Transaction;
2. Reviewed the Parent's Form 10-K for the fiscal year ended December
31, 2002 and the Parent's Form 10-Q for the period ended March 31,
2003, which the Company's management has identified as the most
current financial statements available;
3. Reviewed and discussed with the Parent's management the projections
of the Company's financial performance for the fiscal year ended
December 31, 2003 prepared by the Company's management;
4. Discussed with the Company's management the New Jersey tax
environment, the likely impact of the Borgata casino, and various
other potential new competitive threats in other states;
5. Visited certain facilities and business offices of the Company;
6. Reviewed the historical market prices and trading volume for the
Company's publicly traded securities and other publicly available
information regarding the Company;
7. Reviewed certain publicly available financial data for certain
companies that we deemed comparable to the Company;
8. Reviewed the Existing Indenture and related security documents;
9. Reviewed a memorandum describing the Transaction from the Company
dated July 11, 2003; and
10. Conducted such other studies, analyses and inquiries as we have
deemed appropriate.
Libra has not independently verified the accuracy and completeness of the
information supplied with respect to the Parent and does not assume any
responsibility with respect to it.
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 1
2. GB HOLDINGS, INC.
GB HOLDINGS OVERVIEW
- -------------------------------------------------------------------------------
GB HOLDINGS OVERVIEW
Based on the Company's public filings and other information provided to us by
Company management:
o GB Holdings is the parent of Operating, the owner and operator of the
Sands.
o The Sands is located in Atlantic City, New Jersey on approximately 6.1
acres of land one-half block from the Boardwalk at Brighton Park between
Indiana Avenue and Dr. Martin Luther King, Jr. Boulevard. The facility
currently consists of a casino and simulcasting facility with
approximately 79,000 square feet of gaming space containing approximately
2,300 slot machines and approximately 60 table games; a hotel with 637
rooms (including 57 suites); six restaurants; one cocktail lounge; two
private lounges for invited guests; an 800-seat cabaret theater; retail
space; an adjacent nine-story office building with approximately 77,000
square feet of office space for its executive, financial and
administrative personnel; the "People Mover", an elevated, enclosed,
one-way moving sidewalk connecting the Boardwalk to the Sands using air
rights granted by an easement from the City of Atlantic City and a garage
and surface parking for approximately 1,750 vehicles.
o Atlantic City presently has twelve casinos that in aggregate offer
approximately 1.3 million square feet of gaming space. The Sands is the
smallest of the twelve facilities with approximately 6.1% of the market's
available gaming space.
o GB Holdings presently owns cash well in excess of what is currently
needed to run the business. As of March 31, 2003, GB Holdings had
approximately $46.6 million in total cash and cash equivalents.
o According to management, GB Holdings owns CRDA investments with a net
present value of approximately $10.3 million as of March 31, 2003.
o Atlantic City casinos are faced with the prospect of several forms of
impending additional competition, including:
o The opening of The Borgata in July 2003. This facility, with
135,000 square feet of gaming space and 2,010-room hotel will be
the first new facility in Atlantic City in 12 years.
o Catskills casinos. New York State has passed legislation
authorizing the creation of three full-service casinos in the
Catskills.
o Significant numbers of video lottery machines are expected to be
installed at New York racetracks in the next 12 months.
o Possible legalization of casinos in Pennsylvania.
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 2
3. GB HOLDINGS, INC.
SUMMARY OF PROPOSED EXCHANGE OFFER
- -------------------------------------------------------------------------------
Libra understands the following regarding the transactions contemplated by
Parent, Finance and Operating (together, the "Company"):
o Parent holds all of the outstanding capital stock of Operating and
Finance and Finance is the issuer of
the Existing Notes.
o The Existing Notes are guaranteed by each of Operating and Parent and are
secured by liens on certain of the assets of the Company (the
"Collateral").
o The Company intends to solicit the consent of holders of the Existing
Notes to amend the Amended and Restated Indenture, dated as of October
12, 2001, governing the Existing Notes (the "Existing Indenture") and
related security documents to eliminate substantially all of the
covenants set forth in the Existing Indenture, release all liens on the
Collateral (the "Release") and offer to exchange all of the Existing
Notes for new notes (the "New Notes") to be issued by a newly formed
wholly-owned subsidiary of Operating ("Newco") in the same principal
amount as its Existing Notes.
o The New Notes will be secured by all existing and future assets of Newco,
accrue interest at a rate of 3% per annum payable at maturity, mature on
September 29, 2008, be convertible into 72.5% of the equity of Newco on a
fully diluted basis (or such lesser prorated amount if less than all of
all holders of Existing Notes elect to receive New Notes) and have other
terms similar to those currently included in the Existing Indenture
(except that the New Notes will be assumable in connection with an
acquisition of the Sands and will not contain any "change of control put"
or other similar provisions).
o In connection with the offer to exchange the Existing Notes for the New
Notes, the Company intends to pay to the holders of the Existing Notes
who accept the exchange offer $100 per $1,000 in principal amount of
Existing Notes exchanged, plus any accrued but unpaid interest then due
on the Existing Notes being exchanged (we assume for the purposes hereof
that the Company has paid all interest that is currently due and payable
on the Existing Notes.)
o In connection with the issuance of the New Notes, the Company will
transfer substantially all of its assets and obligations (other than any
Existing Notes that remain outstanding, inter company notes and the stock
of Operating and Finance) to Newco in exchange for (a) warrants to
acquire, for nominal consideration, 27.5% of the common stock of Newco on
a fully diluted basis (the "Warrants") and (b) if all of the holders of
the Existing Notes do not elect to exchange, the pro rata portion of the
72.5% of common stock of Newco reserved for issuance upon the conversion
of the New Notes that would have been issued to such holders of the
Existing Notes had they exchanged.
o Parent will then dividend to its stockholders all of the Warrants, which,
upon conversion of the New Notes would be convertible into 27.5% of the
capital stock of Newco on a fully diluted basis (if 100% of the Existing
Notes are exchanged for New Notes, common stock representing 27.5% of the
Newco stock on a fully diluted basis will be issued in place of the
Warrants and distributed to Parent's common stockholders pro rata.)
o The Warrants, any shares of common stock of Newco issued to Parent, and
any shares of common stock of Newco issuable upon exercise thereof or
upon conversion of the New Notes will be registered with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as
amended, and will be free from restrictions on trading thereunder or
under applicable state securities laws.
o Each of Operating and Finance will also be merged into Parent with Parent
as the surviving corporation.
o The amendments to the Existing Indenture and related security documents,
the Release, the offer to exchange the Existing Notes for the New Notes,
the cash payment to the holders of the Existing Notes, the transfer of
substantially all of the operating assets of the Company to Newco and the
dividend by Parent of the Warrants, issued by Newco, to Parent's
stockholders are referred to collectively herein as the "Transaction."
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 3
4. GB HOLDINGS, INC.
SUMMARY OF VALUATION RANGES
- -------------------------------------------------------------------------------
(US$MM)
ASSUMED
NORMALIZED VALUE OF ASSUMED EXCESS TOTAL
SANDS MULTIPLE OPERATING CASH + CRDA ENTERPRISE
EBITDA RANGE BUSINESS (@ NET PRESENT VALUE) VALUE
------------- ---------- --------------- ----------------------- ---------------
$18.0 5.3x - 6.5x $95.4 - $117.0 $50.0 $145.4 - $167.0
I. PRECEDENT
TRANSACTIONS
$18.0 5.0x - 5.5x $90.0 - $99.0 $50.0 $140.0 - $149.0
II. TRADING
COMPARABLES
N.A. N.A. $104.6 - $112.6 $50.0 $154.6 - $162.6
III. DISCOUNTED CASH FLOW
IV. INTEREST SAVINGS AND ASSUMABLE DEBT
By exchanging into lower coupon notes, the Company will achieve interest
savings equal to the difference between 11% rate on the Existing Notes and
3% rate on the New Notes. Additionally, the New Notes will be assumable and
have no change of control put.
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 4
5. GB HOLDINGS, INC.
SELECTED PUBLIC TRADING COMPARABLES & PRECEDENT TRANSACTIONS
- -------------------------------------------------------------------------------
(dollars in millions, except per share data)
TRADING
GB HOLDINGS, INC. COMPARABLES
----------------------------------------------- ---------------------------------
LTM ENDING EBITDA IS AVERAGE OF AZTAR TRUMP HOTELS
MARCH 31, 2003 (1) LAST 4 FISCAL YEARS (2) CORP. (3) & CASINO (4)
-------------------- -------------------------- -------------- ------------------
Ticker...................... GBH GBH AZR DJT
LTM Ended................... 3/31/03 3/31/03 4/3/03 3/31/03
Share Price (7)............. $ 3.17 $ 3.17 $ 15.34 $ 1.97
Net Revenue................. $ 180.0 $ 180.0 $ 831.3 $ 1,212.0
EBITDA...................... 14.1 20.7 186.6 277.0
EBITDA Margin............ 7.8% 11.5% 22.4% 22.9%
Total Debt ................. $ 110.0 $ 110.0 $ 453.5 $ 1,520.4
Less: Excess Cash (8)....... 39.4 39.4 12.0 128.6
----------- ----------- ---------- -----------
Net Debt ................ $ 70.6 $ 70.6 $ 441.5 $ 1,391.8
Equity Market Value......... 31.7 31.7 558.1 58.9
----------- ----------- ---------- -----------
TOTAL ENTERPRISE VALUE
("TEV")OF OPERATING
BUSINESS............... $ 102.3 $ 102.3 $ 999.6 $ 1,450.7
TOTAL DEBT/LTM EBITDA....... 7.8x 5.3x 2.4x 5.5x
TOTAL NET DEBT/LTM EBITDA... 5.0x 3.4x 2.4x 5.0x
TEV/LTM NET REVENUE......... 0.6x 0.6x 1.2x 1.2x
TEV/LTM EBITDA ............. 7.3x 4.9x 5.4x 5.2x
ACQUISITION
COMPARABLES
---------------------------------------------
RESORTS THE CLARIDGE
INTERNATIONAL (5) HOTEL & CASINO (6)
--------------------- ---------------------
Ticker..................... N.A. N.A.
LTM Ended.................. 9/30/00 6/30/00
Share Price (7)............ N.A. N.A.
Net Revenue................ $ 257.5 $ 177.8
EBITDA..................... 21.5 11.7
EBITDA Margin........... 8.4% 6.6%
Total Debt ................ N.A N.A
Less: Excess Cash (8)...... N.A N.A
----------- -----------
Net Debt ............... N.A N.A
Equity Market Value........ N.A N.A
----------- -----------
TOTAL ENTERPRISE VALUE
("TEV")OF OPERATING
BUSINESS.............. $ 140.0 $ 62.0
TOTAL DEBT/LTM EBITDA...... N.A N.A
TOTAL NET DEBT/LTM EBITDA.. N.A N.A
TEV/LTM NET REVENUE........ N.A N.A
TEV/LTM EBITDA ............ 6.5x 5.3x
- -------------------------------------------------------------------------------
Notes:
(1) EBITDA excludes $0.2MM in LTM Loss on Disposal of Assets EBITDA excludes
$1.3MM in LTM Loss on Impairment of Fixed Assets
(2) EBITDA is pro forma to be an average of GBH's 1999, 2000, 2001 and 2002
EBITDA.
(3) Long term debt includes $5.5 million of Series B ESOP Convertible
Preferred Stock Total debt excludes $98.5 million of Construction in
Progress
(4) Total debt pro forma for March 2003 bond offering Debt values represent
market value as of May 11, 2003 Shares outstanding include 7.9 million
Series A Convertible Preferred Stock EBITDA excludes $3.3MM in LTM
Renegotiation Costs
(5) Resorts International was acquired by Colony Capital on October 30, 2000
Net Revenue and EBITDA are for
the twelve months ended September 30, 2000
(6) The Claridge was acquired by Park Place Entertainment on August 24, 2000
TEV excludes $20.0 million in excess cash Net Revenue and EBITDA are for
the twelve months ended June 30, 2000
(7) Share price as of June 25, 2003.
(8) Excess cash defined as total cash on balance sheet less "cash used in
the business" (assumed to be 4% of LTM net revenue) and excludes CRDA
investments.
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 5
6. GB HOLDINGS, INC.
DISCOUNTED CASH FLOW ANALYSIS
- -------------------------------------------------------------------------------
ASSUMPTIONS
Libra has used the following assumptions in developing the discounted cash flow
analysis set forth elsewhere in this presentation. These assumptions are based
on discussions with management and our experience with other casino operations.
OPERATIONAL ASSUMPTIONS
o $12.1 million in annual interest expense
o $12.0 million in annual depreciation expense
o $10.5 million NOL carryforward
o Year 1 revenues are an average of GB Holdings revenues for the 1999,
2000, 2001 and 2002 fiscal years
o Expenses are maintained at the same percentage of net revenue as they
wereon average for GB Holdings 1999, 2000, 2001 and 2002 fiscal years
o All revenues and expenses are inflation adjusted
DISCOUNTED CASH FLOW ASSUMPTIONS
o Valuation as of January 1, 2004
o EBITDA exit multiples of 5.0 times, 5.5 times and 6.0 times
o 12%, 13% and 14% discount rates
o 40% corporate tax rate
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 6
6. GB HOLDINGS, INC.
DISCOUNTED CASH FLOW ANALYSIS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SUMMARY
- -------------------------------------------------------------------------------
(US$MM)
DCF Valuation - Low (1)..................................................................... $104.6
DCF Valuation - High (2).................................................................... $112.6
Enterprise Reference Range ................................................................. $104.6 - $112.6
- --------------
(1) Represents an exit EBITDA multiple of 5.0x and a discount rate of 13.0%.
(2) Represents an exit EBITDA multiple of 6.0x and a discount rate of 13.0%.
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 7
6. GB HOLDINGS, INC.
DISCOUNTED CASH FLOW ANALYSIS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
OPERATING STATEMENT
- -------------------------------------------------------------------------------
(US$MM)
PROJECTED YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
2004E 2005E 2006E 2007E 2008E 2009E 2010E
--------- --------- --------- ---------- --------- --------- ----------
Revenues:
Casino.................................... $ 224.0 $ 230.7 $ 237.6 $ 244.8 $ 252.1 $ 259.7 $ 267.5
Rooms..................................... 10.4 10.7 11.0 11.3 11.7 12.0 12.4
Food and beverage......................... 27.2 28.0 28.9 29.8 30.6 31.6 32.5
Other..................................... 4.7 4.9 5.0 5.2 5.3 5.5 5.6
Less: Promotional allowances............ (39.5) (40.7) (41.9) (43.2) (44.5) (45.8) (47.2)
--------- --------- --------- ---------- --------- --------- ----------
Net revenues.......................... $ 226.8 $ 233.6 $ 240.6 $ 247.8 $ 255.2 $ 262.9 $ 270.8
% Growth.............................. NA 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Expenses:
Casino.................................... $ 178.3 $ 183.6 $ 189.1 $ 194.8 $ 200.6 $ 206.7 $ 212.9
Rooms..................................... 3.2 3.3 3.4 3.5 3.7 3.8 3.9
Food and beverage......................... 10.0 10.3 10.6 10.9 11.2 11.6 11.9
Other..................................... 3.5 3.6 3.7 3.8 3.9 4.0 4.2
General and administrative................ 11.0 11.4 11.7 12.1 12.4 12.8 13.2
--------- --------- --------- ---------- --------- --------- ----------
Total expenses ....................... $ 206.1 $ 212.2 $ 218.6 $ 225.2 $ 231.9 $ 238.9 $ 246.0
--------- --------- --------- ---------- --------- --------- ----------
EBITDA ...................................... $ 20.7 $ 21.3 $ 22.0 $ 22.6 $ 23.3 $ 24.0 $ 24.7
% Margin ................................. 9.1% 9.1% 9.1% 9.1% 9.1% 9.1% 9.1%
Depreciation Expense ..................... 12.0 12.4 12.7 13.1 13.5 13.9 14.3
--------- --------- --------- ---------- --------- --------- ----------
EBIT ........................................ $ 8.7 $ 9.0 $ 9.3 $ 9.5 $ 9.8 $ 10.1 $ 10.4
Interest Expense ......................... 12.1 12.5 12.8 13.2 13.6 14.0 14.4
--------- --------- --------- ---------- --------- --------- ----------
EBT.......................................... $ (3.4) $ (3.5) $ (3.6) $ (3.7) $ (3.8) $ (3.9) $ (4.0)
Corporate Taxes.............................. -- -- -- -- -- -- --
--------- --------- --------- ---------- --------- --------- ----------
Earning After Taxes....................... $ (3.4) $ (3.5) $ (3.6) $ (3.7) $ (3.8) $ (3.9) $ (4.0)
Plus: Depreciation Expense ............. 12.0 12.4 12.7 13.1 13.5 13.9 14.3
Plus: Interest Expense ................. 12.1 12.5 12.8 13.2 13.6 14.0 14.4
Less: Maintenance CAPEX................. 10.0 10.3 10.6 10.9 11.3 11.6 11.9
--------- --------- --------- ---------- --------- --------- ----------
Free Cash Flow .......................... $ 10.7 $ 11.0 $ 11.4 $ 11.7 $ 12.1 $ 12.4 $ 12.8
PROJECTED YEAR ENDED DECEMBER 31,
---------------------------------
2011E 2012E 2013E
---------- --------- ---------
Revenues:
Casino.................................... $ 275.5 $ 283.8 $ 292.3
Rooms..................................... 12.7 13.1 13.5
Food and beverage......................... 33.5 34.5 35.5
Other..................................... 5.8 6.0 6.2
Less: Promotional allowances............ (48.6) (50.1) (51.6)
---------- --------- ---------
Net revenues.......................... $ 278.9 $ 287.3 $ 295.9
% Growth.............................. 3.0% 3.0% 3.0%
Expenses:
Casino.................................... $ 219.3 $ 225.8 $ 232.6
Rooms..................................... 4.0 4.1 4.2
Food and beverage......................... 12.3 12.7 13.0
Other..................................... 4.3 4.4 4.6
General and administrative................ 13.6 14.0 14.4
---------- --------- ---------
Total expenses ....................... $ 253.4 $ 261.0 $ 268.8
---------- --------- ---------
EBITDA ...................................... $ 25.5 $ 26.3 $ 27.0
% Margin ................................. 9.1% 9.1% 9.1%
Depreciation Expense ..................... 14.8 15.2 15.7
---------- --------- ---------
EBIT ........................................ $ 10.7 $ 11.1 $ 11.4
Interest Expense ......................... 14.9 15.3 15.8
---------- --------- ---------
EBT.......................................... $ (4.1) $ (4.3) $ (4.4)
Corporate Taxes.............................. -- -- --
---------- --------- ---------
Earning After Taxes....................... $ (4.1) $ (4.3) $ (4.4)
Plus: Depreciation Expense ............. 14.8 15.2 15.7
Plus: Interest Expense ................. 14.9 15.3 15.8
Less: Maintenance CAPEX................. 12.3 12.7 13.0
---------- --------- ---------
Free Cash Flow .......................... $ 13.2 $ 13.6 $ 14.0
5.0X EXIT EBITDA 5.5X EXIT EBITDA
MULTIPLE MULTIPLE
----------------------------- --------------------------------
12.0% 13.0% 14.0% 12.0% 13.0% 14.0%
--------- ---------- -------- --------- --------- ----------
Discounted Free Cash Flow $ 67.6 $ 64.8 $ 62.2 $ 67.6 $ 64.8 $ 62.2
2004E-2013E
Discounted Terminal Value 43.5 39.8 36.5 47.9 43.8 40.1
--------- ---------- -------- --------- --------- ----------
Enterprise Value $ 111.1 $ 104.6 $ 98.6 $ 115.5 $ 108.6 $ 102.3
6.0X EXIT EBITDA
MULTIPLE
-------------------------------
12.0% 13.0% 14.0%
--------- -------- ----------
Discounted Free Cash Flow $ 67.6 $ 64.8 $ 62.2
2004E-2013E
Discounted Terminal Value 52.2 47.8 43.8
--------- --------- ---------
Enterprise Value $ 119.8 $ 112.6 $ 105.9
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 8
7. GB HOLDINGS, INC.
ISSUES FACING NEW JERSEY CASINOS
- -------------------------------------------------------------------------------
ATLANTIC CITY OUTLOOK
NEGATIVE ISSUES
o Impending increase in New Jersey State gaming taxes.
o Possible cannibalization due to opening of The Borgata in Atlantic City
in July 2003.
o Possible opening of Native American casinos in Catskills.
o Likely installation of VLT's at New York State racetracks.
o Possible legalization of casinos in Pennsylvania.
POSITIVE ISSUES
o Market growth from The Borgata tapping into new market segment.
o Market growth from other Atlantic City infrastructure investments:
o Tropworld expansion
o Pier mall project
o Core industry for New Jersey.
o Natural attraction of physical location.
o Historical mystique (Miss America Pageant).
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 9
8. GB HOLDINGS, INC.
OPINION SUMMARY
- -------------------------------------------------------------------------------
OPINION SUMMARY
o Based upon the foregoing, and in reliance thereon, it is our opinion that
the consideration to be received by the common stockholders of Parent in
the Transaction is fair, from a financial point of view, to the common
stockholders of Parent.
See the Fairness Opinion and our Statement of Contingent and Limiting Conditions
for certain assumptions and conditions with respect to the Fairness Opinion and
this presentation.
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 10
41295748.02
9. GB HOLDINGS, INC.
STATEMENT OF CONTINGENT AND LIMITING CONDITIONS
- -------------------------------------------------------------------------------
This presentation is made subject to the following contingent and limiting
conditions, as well as the other conditions or assumptions set forth elsewhere
herein:
1. We have not independently verified the accuracy and completeness of the
information supplied to us with respect to the Company and do not assume
any responsibility with respect to it.
2. We have relied upon and assumed without independent investigation, with
your permission, that all information reviewed by us with respect to the
Company, whether supplied by the Company or its advisors or obtained by
us from publicly available sources, is true, correct and complete in all
material respects and does not contain any untrue statement of material
fact or omit to state a material fact necessary to make the information
supplied to us not misleading.
3. We have further relied upon and assumed, without independent
verification, that the financial forecasts and projections provided to us
have been reasonably prepared and reflect the best currently available
estimates of the future financial results and condition of the Company,
and that there has been no material change in the assets, financial
condition, business or prospects of the Company since the date of the
most recent financial statements made available to us.
4. We have assumed, without independent verification, that the Transaction
will be consummated in all material respects in accordance with
applicable laws, the Existing Indenture and related security documents
and the Transaction Summary.
5. At your direction, we also have assumed for the purposes of the Fairness
Opinion that the holders of at least 58% of the Existing Notes, or $63.8
million principal amount, will exchange their Notes into an equal
principal amount of New Notes.
6. The Fairness Opinion is necessarily based on business, economic, market
and other conditions as they exist and can be evaluated by us at the date
of the Fairness Opinion letter.
7. Events occurring after the date of the Fairness Opinion letter could
materially affect the assumptions used in preparing such Opinion.
8. We have not analyzed and are expressing no view on the value of what the
common stock of Parent or Newco actually will be when the Transaction is
consummated or the price at which the common stock of Parent or Newco
will trade subsequent thereto.
9. For purposes of the Fairness Opinion, with your permission, we have not
undertaken any inquiry as to, or taken into consideration, the possible
tax consequences of the Transaction (including whether common
stockholders of Parent will recognize taxable income as a result of the
Transaction). Such tax consequences could be material and could affect
the analysis underlying the conclusions reached in the Fairness Opinion.
10. Our services to you, including without limitation the Fairness Opinion
and this presentation, are provided solely for the information of the
Independent Committee in its evaluation of the consideration to be
received by the common stockholders of Parent in the Transaction and the
Fairness Opinion and presentation are given to you solely for that
purpose, and are not intended to confer rights or remedies upon or be
relied upon by, any securityholder of the Company or Newco or any other
person or entity.
11. We will receive a fee for our services in connection with the Opinions,
and we will be indemnified by the Parent for certain liabilities arising
from the delivery of the Opinions.
12. No opinion, counsel or interpretation is intended in matters that require
legal or other appropriate professional advice. It is assumed that such
opinions, counsel or interpretations have been or will be obtained from
the appropriate professional sources.
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 11
9. GB HOLDINGS, INC.
STATEMENT OF CONTINGENT AND LIMITING CONDITIONS
- -------------------------------------------------------------------------------
13. The conclusions reached in the Fairness Opinion and this presentation
represent our considered opinion based upon information furnished to us
by the Company and other sources. The extent to which the conclusions
arrived at in the Fairness Opinion and herein should be relied upon
should be governed and weighted accordingly.
14. The Fairness Opinion is valid only for the stated purpose set forth
therein and the date of such Opinion.
15. We assume no responsibility for the legal description or other matters
including legal or title considerations of the business interest being
valued. Title to the subject business interest is assumed to be good and
marketable unless otherwise stated. We assume that the subject business
interest is free and clear of any or all liens or encumbrances unless
otherwise stated. We assume no hidden or unapparent conditions regarding
the subject business interest.
16. Neither Libra nor any individual signing the Fairness Opinion or
associated with this presentation shall be required by reason thereof to
furnish additional analyses, or to give testimony, or to be in attendance
in court with reference to the business interest in question unless
specific arrangements therefor have been made.
17. Unless otherwise stated in this presentation, we assume that all required
licenses, certificates of occupancy, consents, or other legislative or
administrative authority from any local, state, or national government or
private entity or organization have been or can readily be obtained or
renewed for any use on which the Fairness Opinion is based. We assume
that there is full compliance with all applicable federal, state and
local laws and regulations, unless the lack of compliance is otherwise
stated.
18. We assume responsible ownership and competent management with respect to
the subject business interest.
19. Industry information and data on comparable companies used as background
for our analysis were obtained from regularly published sources and we
have not independently verified the accuracy and completeness of such
information.
20. Libra has not retained separate legal counsel to review the legal
agreements that set forth the rights, preferences, privileges and
obligations of the noteholders or stockholders of GB Holdings, Inc., and
is relying on management and its counsel for its understandings thereof.
21. Libra is not acting as a financial, tax or other advisor to any person in
connection with this presentation or the Fairness Opinion, and none of
the recipients of this presentation or the Fairness Opinion shall rely on
Libra in any manner in determining whether to approve or enter into the
Transaction or in assessing the legal or tax treatment of the
Transaction.
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 12
APPENDIX A.
GB HOLDINGS, INC.
SELECTED HISTORICAL FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
PRE-ORGANIZATION
1/1/00 - 9/30/00
POST-REORGANIZATION
10/1/00 - POST- POST- POST-
PRE-REORGANIZATION 12/31/00 REORGANIZATION REORGANIZATION REORGANIZATION
------------------------------ ------------------- ------------- ------------- ----------------
FYE FYE COMBINED FYE FYE FYE LTM
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 3/31/03
---------------- ------------- ------------------- ------------- ------------- ----------------
Revenues:
Casino............ $ 219,368,000 $ 227,475,000 $ 229,757,000 $ 232,369,000 $ 206,417,000 $ 194,386,000
Rooms ............ 9,200,000 9,273,000 9,480,000 11,570,000 11,140,000 10,853,000
Food and
beverage........ 25,381,000 27,870,000 28,323,000 29,408,000 23,305,000 21,504,000
Other............. 3,767,000 5,960,000 4,500,000 4,683,000 3,739,000 3,694,000
---------------- ------------- ------------------- ------------- ------------- ----------------
257,716,000 270,578,000 272,060,000 278,030,000 244,601,000 230,437,000
Less: Promotional
allowances ..... (20,372,000) (23,683,000) (41,225,000) (42,128,000) (51,128,000) (50,407,000)
---------------- ------------- ------------------- ------------- ------------- ----------------
Net revenues ... 237,344,000 246,895,000 230,835,000 235,902,000 193,473,000 180,030,000
Expenses:
Casino............ 186,761,000 197,906,000 183,585,000 188,409,000 143,189,000 138,256,000
Rooms ............ 3,174,000 2,858,000 2,770,000 4,362,000 2,985,000 2,314,000
Food and
beverage........ 9,998,000 10,274,000 8,977,000 9,814,000 10,915,000 10,482,000
Other ............ 2,599,000 4,234,000 3,741,000 3,374,000 2,625,000 2,496,000
General and
administrative.. 12,497,000 10,586,000 9,838,000 10,961,000 12,799,000 12,409,000
---------------- ------------- ------------------- ------------- ------------- ----------------
Total expenses.. 215,029,000 225,858,000 208,911,000 216,920,000 172,513,000 165,957,000
---------------- ------------- ------------------- ------------- ------------- ----------------
EBITDA............... $ 22,315,000 $ 21,037,000 $ 21,924,000 $ 18,982,000 $ 20,960,000 $ 14,073,000
=============== ============== =============== =============================================
- --------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 13
APPENDIX B.
GB HOLDINGS, INC.
SELECTED NON-NEVADA SINGLE PROPERTY GAMING TRANSACTIONS LESS THAN
$300 MILLION
- -------------------------------------------------------------------------------
LTM
DATE PRICE EBITDA
ANNOUNCED ACQUIROR TARGET ($MM) MULTIPLE
- -------------- --------------------------------------- ---------------------------------- ---------- -----------
Dec-02 Isle of Capri Colorado Central Station & Grande $ 84.0 5.8x
Oct-02 Centaur Partners Harrah's Wagon Wheel ,Colorado 20.0 N.M.
Jul-02 Boyd Gaming Corporation Isle of Capri-Tunica 12.2 N.M.
Mar-02 Yung Family Greenville Jubilee 42.0 4.9x
Apr-01 Boyd Gaming Delta Downs 125.0 N.M.
Feb-01 Jacobs Entertainment Black Hawk Gaming & Development 110.7 5.3x
Dec-00 Majestic Star Fitzgeralds 149.0 4.5x
Oct-00 Colony Capital Resorts 140.0 6.5x
Aug-00 Park Place Entertainment The Claridge Hotel & Casino 62.0 5.3x
Jul-00 Penn National Gaming CRC Holdings 160.3 5.5x
Jul-00 Isle of Capri President Casino Davenport 58.2 4.7x
Feb-00 Isle of Capri Kansas City Flamingo 33.5 N.M.
Jan-00 Black Hawk Gaming & Development Gold Dust West Casino 26.5 5.0x
Dec-99 Penn National Gaming CMAG Bay St. Louis & Boomtown Biloxi 195.0 5.5x
Aug-99 Lady Luck Gaming Corporation Miss Marguette Casino 41.7 4.4x
Jul-99 Peninsula Gaming Diamond Jo Casino 77.0 4.7x
Jun-99 Boyd Gaming Blue Chip Casino 273.5 4.2x
Jul-97 Boyd Gaming Treasure Chest 112.9 4.0x
Apr-96 Boyd Gaming Par-a-Dice Gaming 174.0 5.0x
--------
MEAN EBITDA MULTIPLE 5.0x
========
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 14
APPENDIX C.
GB HOLDINGS, INC.
ADDITIONAL PRECEDENT GAMING TRANSACTIONS
- -------------------------------------------------------------------------------
LTM
DATE PRICE EBITDA
ANNOUNCED ACQUIROR TARGET ($MM) MULTIPLE
- ---------------- ---------------------------------- -------------------------------------- --------- -------------
Dec-02 Isle of Capri Colorado Central Station & Grande $ 84.0 5.8x
Oct-02 Centaur Partners Harrah's Wagon Wheel, Colorado 20.0 N.M.
Aug-02 Penn National Gaming Hollywood Casino Corp. 780.0 7.2x
Jul-01 International Game Technology Anchor Gaming 1,365.0 6.5x
Apr-01 Boyd Gaming Delta Downs 125.0 N.M.
Apr-01 Harrah's Entertainment Harveys Casino Resorts 675.0 6.4x
APR-01 ARGOSY GAMING JOLIET EMPRESS 465.0 6.3x
FEB-01 JACOBS ENTERTAINMENT BLACK HAWK GAMING & DEVELOPMENT 110.7 5.3x
DEC-00 MAJESTIC STAR FITZGERALDS 149.0 4.5x
Oct-00 Colony Capital Resorts 140.0 6.5x
OCT-00 AMERISTAR CASINOS STATION KC AND ST. CHARLES 488.0 5.3x
Oct-00 Station Casinos The Reserve 70.0 N.M.
AUG-00 PARK PLACE ENTERTAINMENT THE CLARIDGE HOTEL & CASINO 62.0 5.3
JUL-00 PENN NATIONAL GAMING CRC HOLDINGS 160.3 5.5x
Jul-00 Station Casinos Fiesta Casino and Hotel 185.0 8.0x
JUL-00 ISLE OF CAPRI PRESIDENT CASINO DAVENPORT 58.2 4.7x
Jun-00 Station Casinos Santa Fe Casino and Hotel 205.0 8.7x
Mar-00 MGM Grand Mirage Resorts 6,400.0 9.8x
Feb-00 Isle of Capri Kansas City Flamingo 33.5 N.M.
Jan-00 Black Hawk Gaming & Development Gold Dust West Casino 26.5 5.0x
DEC-99 PENN NATIONAL GAMING CASINO MAGIC AND BOOMTOWN BILOXI 195.0 5.5x
Dec-99 Horseshoe Gaming Empress Entertainment 600.0 7.2x
OCT-99 ISLE OF CAPRI LADY LUCK GAMING CORPORATION 412.0 6.0x
Aug-99 Harrah's Entertainment Players International 425.0 7.1x
Jul-99 Peninsula Gaming Diamond Jo Casino 84.0 5.2x
JUN-99 BOYD GAMING BLUE CHIP CASINO 273.5 4.2x
Apr-99 Park Place Entertainment Ceasars World 3,000.0 9.0x
Mar-99 International Game Technology Sodak Gaming 230.0 7.8x
Mar-99 Anchor Gaming Powerhouse Technologies 280.0 9.6x
Nov-98 MGM Grand Primadonna Resorts 550.0 6.7x
Aug-98 Harrah's Entertainment Rio Hotel and Casino 888.0 8.1x
Jun-98 Park Place Entertainment Grand Casinos 895.0 7.7x
Jun-98 Harrah's Entertainment Showboat, Inc. 1,200.0 11.6x
FEB-98 HOLLYWOOD PARK CASINO MAGIC CORP. 340.0 7.2x
FEB-98 COLONY CAPITAL HARVEYS CASINO RESORTS 450.0 6.0x
Jul-97 Hollywood Park Boomtown, Inc. 175.2 5.0x
Aug-96 Sun International Hotels Griffin Gaming 262.5 5.4x
Jun-96 Trump Hotels & Casino Trump's Castle Casino 496.2 N.M.
Jun-96 Hilton Hotels Corp. Bally's Entertainment Corp. 2,979.3 10.7x
APR-96 BOYD GAMING PAR-A-DICE GAMING 174.0 5.0x
Mar-95 Mandalay Resort Group Gold Strike Resorts 590.4 15.2x
- -----------------------------------------------------------------------------------------------------------------
MEAN EBITDA MULTIPLE OF ----------
BOLD TRANSACTIONS 5.4x
==========
- -------------------------------------------------------------------------------
[LIBRA SECURITIES, LLC LOGO] 15