Holly Holdings announces hearing date for Country World Casinos
BALA CYNWYD, Pa.--Jan. 6, 1997--Holly Holdings Inc. (NASDAQ: HOPRD, HOPRW, HOPRP; BSE: HOP, HOPP),
today announced Jan. 27, 1997 as the hearing date for Country World Casinos Inc.'s plan and disclosure to be heard in U.S.
Bankruptcy Court, District of Colorado.
The company believes that with the completion of this step and the payment to the unsecured creditors, Country World will
be able to complete the bankruptcy proceedings and emerge from Chapter 11.
William H. Patrowicz, president of Holly Holdings Inc., stated, "We are thrilled with the prospect of finally bringing these
matters to conclusion so we can move on to planning construction of the facility."
Holly Holdings Inc., headquartered in Bala Cynwyd, Pa., has a wholly owned subsidiary, Navtech Industries Inc., of
Shiprock, N.M. and a majority-owned subsidiary, Country World Casinos Inc., of Denver. Navtech is an electronic contract
manufacturer currently producing products for the casino, hotel, medical and signage industries. Country World Casinos Inc.
is a development corporation whose plan is to construct a casino in Black Hawk, Colo., as well as a hotel complex.
CONTACT: Holly Holdings Inc., Bala Cynwyd William H. Patrowicz, 610/617-0400 or Martin E. Janis & Co. Inc. Elliott
Jacobson, 312/943-1100
GRAND CASINOS ANNOUNCES PLAN FOR FINANCIAL RESTRUCTURING OF STRATOSPHERE CORPORATION
MINNEAPOLIS, MN--Jan. 6, 1997--Grand Casinos, Inc. (NYSE:GND) today announced that the company, together with
Stratosphere Corporation and an Ad Hoc Committee representing the holders of more than 57 percent of Stratosphere's 14
1/4 percent First Mortgage Notes, has reached an agreement-in- principal for the restructuring of the Notes and the equity
capitalization of Stratosphere. A consensual Chapter 11 bankruptcy reorganization of Stratosphere Corporation is expected
to be presented to Federal Bankruptcy Court in Nevada later this month. The agreement-in-principal will expire unless a
plan of reorganization consistent with the terms of the agreement is confirmed by June 30, 1997.
Under the terms of the restructuring, the $203 million Stratosphere Corporation 14 1/4 percent Notes currently outstanding
will be exchanged for $203 million of new Stratosphere Notes bearing interest at 11 1/4 percent, due May 15, 2002. The
plan calls for interest payable in kind at 14 1/4 percent per annum for the November 15, 1996, interest payment, now in
arrears, and a payment in kind at 11 1/4 percent per annum for the May 15, 1997, interest payment, with all subsequent
interest payments paid in cash. The new Notes will also receive additional contingent interest equal to 15 percent of
Stratosphere's consolidated annual cash flow from $60 to $80 million, up to $3 million per year. Stratosphere may issue up
to $25 million in additional new Notes to fund its working capital requirements.
Grand Casinos, Inc. Chairman and Chief Executive Officer, Lyle Berman, noted, "While we are disappointed that
Stratosphere Corporation must follow a course of restructuring and bankruptcy, we are optimistic that the new structure will
give Stratosphere a reasonable basis from which to move forward."
Under the agreement, Grand Casinos will convert $50 million due from Stratosphere into 40 percent of the common stock of
Stratosphere Corporation outstanding upon the completion of the reorganization. Grand Casinos previously loaned this
amount to Stratosphere pursuant to its completion guarantee on the construction of the Stratosphere casino, hotel, and tower,
which opened in Las Vegas on April 29, 1996
The remaining 60 percent of the post-reorganization common stock ownership of Stratosphere will be sold through a rights
offering to all existing holders of Stratosphere common stock, including Grand Casinos. The rights offering will generate net
proceeds of approximately $75 million. As part of the restructuring plan, Grand Casinos has agreed to purchase its pro rata
share of the rights offering (approximately 42 percent) for approximately $31.9 million. Additionally, Grand Casinos will
provide a standby commitment to purchase any unsubscribed portion of the rights offering not exercised by other
Stratosphere shareholders. Existing Stratosphere shares will be canceled and shareholders will receive a transferable right
to purchase one share of common stock in the reorganized Stratosphere at $1.31 per share. Each purchaser of a share
pursuant to the rights offering, other that those subscribed by Grand Casinos, as its pro rata share, also will receive a
three-year warrant to purchase one-half of a share of common stock at $3.00 per full share. The rights offering will result in
the issuance of 58 million shares of Stratosphere common stock. Upon completion of the reorganization and rights offering,
Stratosphere will have approximately 96.7 million shares of common stock outstanding and warrants outstanding to
purchase approximately an additional 17 million shares of common stock at $3.00 per share.
Assuming full subscription by the public shareholders in the rights offering, Grand Casinos will contribute approximately
$31.9 million to the reorganized Stratosphere Corporation. These shares together with shares received from the conversion
of its $50 million of debt, will result in Grand Casinos owning 65 percent of Stratosphere Corporation. Grand Casinos will
manage Stratosphere pursuant a two-year management agreement.
Grand Casinos also announced that it anticipates that it will record a 1996 fourth-quarter charge to net income of between
$135 and $150 million, or between $3.15 and $3.50 per share, to reflect the write off of its present investments in
Stratosphere Corporation.
The additional $75 million of equity contributed to Stratosphere will provide the capital required to complete construction
projects including an additional hotel tower with approximately 1,000 rooms. As part of the proposed agreement, Grand
Casinos will provide a completion guarantee covering up to $25 million in cost overruns on completion of the additional
hotel rooms. Any amounts paid by Grand Casinos pursuant to the completion guarantee would constitute subordinated debt
of Stratosphere with interest payable at 11 1/4 percent.
The restructuring is subject to a number of conditions, including plan confirmation by the Federal Bankruptcy Court in
Nevada, resolution or discharge of certain pending securities litigation, receipt of all necessary regulatory approvals,
including those required by Nevada gaming authorities, completion of definitive plan related documents, receipt by Grand
Casinos of an investment banking fairness opinion, and other customary closing conditions. In addition, Grand Casinos'
obligations under the agreement are conditioned upon Stratosphere's operating cash flows for the months between October
1, 1996, and June 30, 1997, averaging not less than $2.267 million per month. Stratosphere's operating cash flows for
October and November of 1996, adjusted to reflect certain extraordinary items, were $2.7 million and $2.5 million,
respectively.
Commenting further on Grand Casinos' investment in the restructured Stratosphere Corporation, Mr. Berman noted, "The
proposed restructuring represents a good opportunity for Grand Casinos to control 65 percent of a 2,500 room casino, hotel,
and one- of-a-kind attraction on the Las Vegas Strip, representing an investment, at cost, of over $450 million. In addition,
we continue to be encouraged by the results at the property since the repositioning of the gaming product and launch of the
new marketing program this past October."
Grand Casinos, Inc. has been a publicly traded company since 1991 and is listed on the New York Stock Exchange under
the trading symbol GND. The company currently owns and operates the three largest casino hotel resorts in the state of
Mississippi, manages two land-based casinos in Louisiana, and manages two casino hotel resorts in Minnesota.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain
information included in this press release (as well as information included in oral statements or other written statements
made or to be made by the Company) contains statements that are forward-looking, such as statements relating to plan for
future expansion and other business development activities as well as other capital spending, financing sources and the
effects of regulation (including gaming and tax regulation) and competition. Such forward-looking information involves
important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results
may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to development and construction activities, dependence on
existing management, leverage and debt service (including sensitivity to fluctuations in the interest rates), domestic or
global economic conditions, activities of competitors and the presence of new or additional competition, fluctuations and
changes in customer preferences and attitudes, changes in federal or state tax laws of the administration of such laws and
changes in gaming laws or regulations (including the legalization of gaming in certain jurisdictions). For more information,
review the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form
10-K and certain registration statements of the Company.
CONTACT: Grand Casinos, Inc. Lawrence Taylor, 612/449-7076 or Jaye Snyder, 612/449-8556