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 earliest event reported) May 5, 1998
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MTR GAMING GROUP, INC.
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(exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-20508 84-1103135
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(Commission File Number) (IRS Employer Identification Number)
STATE ROUTE 2 SOUTH, CHESTER, WEST VIRGINIA
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(Address of principal executive offices)
26034
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(Zip Code)
Registrant's Telephone Number, Including Area Code: (304) 387-5712
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N/A
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(Former name or former address, if changed since last report)
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
MTR Gaming Group, Inc. (the "Company") through its newly formed, wholly
owned subsidiary, Speakeasy Gaming of Reno, Inc., consummated the purchase on
May 5, 1998 of the Reno Ramada in Reno for $8 million (the "Reno Property").
The transaction was an asset purchase for cash, and the Reno Property is
qualified for unrestricted casino gaming upon licensing of a casino operator
pursuant to "grandfather" provisions of applicable state and municipal laws.
The Company expects to apply for gaming approval and intends to lease the
gaming area to a licensed casino operator. The Company also plans to pursue
a franchise agreement for the Reno Property with Ramada Franchise Systems,
Inc.
DESCRIPTION OF THE RENO PROPERTY. The Company purchased the Reno Ramada
Hotel from Reno Hotel LLC, an affiliate of the Company's lender, for $8
million in a negotiated transaction. The Reno Property was used as a hotel
by the previous owner prior to its purchase by the Company. The Reno
Property has a total of 262 hotel rooms, 236 of which are located in an
eleven story tower and 26 of which are in a separate three-story structure.
The property is located at 6th and Lake Streets in Reno and has parking for
approximately 238 cars. The tower also has a restaurant, a deli and two
bars. The Reno Property has an 8000 square foot casino area and a small
convention facility. The property recently underwent renovations of
approximately $4 million. The Company's development plans for the casino at
the Reno Property call for 350 slot machines, three blackjack tables, a
roulette wheel, and a craps table. The Reno casino's theme will be similar
to the Speakeasy concept in place at the Company's Mountaineer Racetrack &
Gaming Resort in West Virginia. The Company also plans to spend
approximately $500,000 on renovations of the hotel and expansion of the
capacity of the convention facility and will rename the project the
"Speakeasy Hotel & Casino".
OPERATION OF THE RENO PROPERTY/GAMING LICENSING. The Company and
Speakeasy Gaming of Reno, Inc. intend to apply as soon as practicable to the
authorities in the State of Nevada for all necessary permits and licenses
required for the Company to operate a casino at the Reno Property. The
Company is advised, however, that the licensing process may take
approximately one year to complete and that there can be no assurances that
the Company will obtain the necessary approvals. Until the Company obtains
these approvals, it will not be permitted to conduct gaming or participate in
any gaming revenues generated at the Reno Property. In the interim, the
Company will operate the hotel and restaurant and lease the casino area to
an independent, licensed casino operator as permitted by Nevada law. See
Item 5. Other Events - Financing of the Acquisitions (which is incorporated
into this Item 2 with respect to the acquisition of the Reno Property).
Item 5. OTHER EVENTS.
The Company through its newly formed, wholly owned subsidiary, Speakeasy
Gaming of Las Vegas Reno, Inc., consummated the purchase on May 5, 1998 of
the Cheyenne Hotel & Casino in North Las Vegas for $5.5 million (the "Las
Vegas Property"). The transaction was an asset purchase for cash, and the Las
Vegas Property is qualified for unrestricted casino gaming upon licensing of
a casino operator pursuant to "grandfather" provisions of applicable state
and municipal laws. The Company expects to apply for gaming approval and
intends to lease the
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gaming area to a licensed casino operator. The Company also plans to pursue
a franchise agreement for the Las Vegas Property with Ramada Franchise
Systems, Inc.
DESCRIPTION OF THE LAS VEGAS PROPERTY. The Company purchased the Las
Vegas Property from Banter, Inc. for $5.5 million. The Cheyenne is a
131-room hotel consisting of one two-story building and one three-story
building located at 3227 Civic Center Drive in North Las Vegas at the
intersection of Cheyenne Avenue and Interstate 15. I-15 is a major
interstate freeway, which extends north into Utah and south into the Los
Angeles Basin. The Las Vegas Property is approximately five miles from the
Las Vegas Motor Speedway and three miles from Nellis Air Force Base. The
hotel has a bar, restaurant, and swimming pool as well as parking for
approximately 172 cars. The prior owners had operated 25 slot machines at
the hotel's bar and had commenced construction of an 18,000 square foot
addition including a 10,000 square foot casino, which the Company intends to
complete. The Company's plan for the casino calls for 350 slot machines,
three blackjack tables, one roulette wheel, and one craps table. The Company
plans to implement a motor racing theme for the casino in an effort to
accommodate patrons of the nearby Las Vegas Motor Speedway. The Company
estimates that the cost of construction of the casino and renovation of some
of the hotel rooms will be approximately $2 million. The Company expects to
complete construction within the next 120 days and will rename the project
the "Speedway Hotel & Casino".
OPERATION OF THE LAS VEGAS PROPERTY/GAMING LICENSING. The Company and
Speakeasy Gaming of Las Vegas, Inc. intend to apply as soon as practicable to
the authorities in the State of Nevada for all necessary permits and licenses
required for the Company to operate a casino at the Las Vegas Property. The
Company is advised, however, that the licensing process may take
approximately one year to complete and that there can be no assurances that
the Company will obtain the necessary approvals. Until the Company obtains
these approvals, it will not be permitted to conduct gaming or participate in
any gaming revenues generated at the Las Vegas Property. In the interim, the
Company will operate the hotel and restaurant and lease the casino area at
the Las Vegas Property to an independent, licensed casino operator as
permitted by Nevada law.
FINANCING OF THE ACQUISITIONS. The Company financed the acquisition of
the Reno Ramada Hotel and the Cheyenne Hotel & Casino through its cash on
hand and additional borrowings from its existing lender, Madeleine LLC.
Pursuant to a Third Amended and Restated Term Loan Agreement entered as of
April 30, 1998 by Mountaineer Park, Inc., Speakeasy Gaming of Las Vegas,
Inc., and Speakeasy Gaming of Reno, Inc. jointly and severally as borrowers,
the Company as guarantor, and Madeleine LLC as lender, the Company increased
its borrowings (previously the principal sum of $21,476,500) by (i) $8
million, representing the full purchase price of the Reno Ramada Hotel; (ii)
$3,765,000 toward the purchase of the Cheyenne Hotel & Casino; and (iii)
$150,000 in lender's fees. The Company expended approximately $2 million of
its cash reserves for the balance of the purchase price of the Las Vegas
Property and closing costs and expenses of the transactions. The loan
amendment also provides a construction line of credit of up to $1.7 million
for the Cheyenne property and increases Mountaineer's line of credit by $5
million (up to $1.5 million of which may be used for improvements at the
Nevada properties). The loans, as well as any draws against the lines of
credit, continue to be for a term ending July 2, 2001 with monthly payments
of interest only at the rate of 13% per year with all
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principal becoming due at the end of the term. The loans likewise remain
secured by substantially all of the assets of Mountaineer and now Speakeasy
Vegas and Speakeasy Reno and are unconditionally guaranteed by the Company.
The call premium applicable to prepayment of the loans (5% until July 2,
1998, 3% between July 3, 1998 and July 2, 1999, 2% from July 3, 1999 until
July 2, 2000, and 1% from July 3, 2000 until the end of the term), however,
does not apply to the $11.8 million borrowed for the acquisitions or draws on
the $1.7 million Cheyenne construction line of credit.
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS CONCERNING THE COMPANY'S
PLANS FOR CONSTRUCTION OF IMPROVEMENTS AS WELL AS ITS ESTIMATES OF THE TIME AND
EXPENSE INVOLVED IN SUCH CONSTRUCTION AT ITS RECENTLY ACQUIRED HOTEL PROPERTIES;
THE ENTERING OF FRANCHISE AGREEMENTS; LICENSING, OPERATION, AND CONFIGURATION OF
GAMING FACILITIES AT THE NEVADA PROPERTIES; AND THE LONG-TERM PROSPECTS FOR THE
SUCCESSFUL OPERATION OF THE ACQUIRED PROPERTIES. SUCH STATEMENTS ARE BASED ON
THE COMPANY'S CURRENT PLANS AND EXPECTATIONS. ACTUAL RESULTS COULD DIFFER
MATERIALLY BASED UPON A NUMBER OF FACTORS, INCLUDING BUT NOT LIMITED TO WEATHER
CONDITIONS, INABILITY TO OBTAIN GAMING LICENSES IN THE STATE OF NEVADA,
COMPETITION, GENERAL ECONOMIC CONDITIONS AFFECTING THE RESORT BUSINESS,
DEPENDENCE UPON KEY PERSONNEL, AND OTHER FACTORS DESCRIBED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
Financial statements with respect to the business acquired as
described in Item 2 hereof, to the extent required, will be filed by
amendment to this report no later than July 20, 1998.
(b) Pro Forma Financial Information.
Pro forma financial information, to the extent required, will be filed
by amendment to this report no later than July 20, 1998.
(c) Exhibits.
10.1 (1) Purchase Agreement by and between Speakeasy Gaming of
Nevada, Inc., and Banter, Inc. dated as of May 5, 1998.
10.2 (1) Purchase Agreement by and between Speakeasy Gaming of
Reno, Inc. and Reno Hotel, LLC dated April 30, 1998.
10.3 (1) First Amendment to Purchase Agreement by and between
Speakeasy Gaming of Las Vegas, Inc. and Banter, Inc. dated
May 5, 1998.
10.4 (1) Second Amendment First Amendment to Purchase Agreement by
and among Speakeasy Gaming of Las Vegas, Inc., Banter,
Inc. and Southwest Exchange Corporation dated May 5, 1998.
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10.5 (1) Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing by Speakeasy of Las Vegas,
Inc. as Trustor, Nevada Title Company, as Trustee for the
benefit of Madeleine LLC, as Beneficiary dated April 30,
1998.
10.6 (1) Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing by Speakeasy Gaming of Reno,
Inc. as Trustor, United Title of Nevada, as Trustee for
the benefit of Madeleine LLC, as Beneficiary dated April
30, 1998.
10.7 (1) Third Amended and Restated Term Loan Agreement amended and
restated as of April 30, 1998 by and among Mountaineer
Park, Inc., Speakeasy Gaming of Las Vegas, Inc.,
Speakeasy Gaming of Reno, Inc., MTR Gaming Group, Inc. and
Madeleine LLC.
10.8 (1) Pledge and Security Agreement by and between MTR Gaming
Group, Inc. and Madeleine LLC dated as of April 30, 1998.
10.9 (1) General Security Agreement by and between Speakeasy Gaming
of Reno, Inc. and Madeleine LLC dated as of April 30,
1998.
10.10 (1) General Security Agreement by and between Speakeasy Gaming
of Las Vegas, Inc. and Madeleine LLC dated as of May 5,
1998.
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(1) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the three months ended March 31, 1998.
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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.
MTR GAMING GROUP, INC.
By: /s/ Edson R. Arneault
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Edson R. Arneault, President
Date: May 20, 1998
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