Table Of Contents

---

---

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

 FORM 10-Q 

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2016

 

OR

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from            to            

 

Commission file number 000-54480

 

ALST CASINO HOLDCO, LLC

(Exact name of registrant as specified in its charter)

 

Delaware		45-2487922
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

7300 Aliante Parkway, North Las Vegas, NV		89084
(Address of principal executive offices)		(Zip Code)

 

(702) 692-7777

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 

	Large accelerated filer ☐				Accelerated filer ☐
	Non-accelerated filer ☒		(Do not check if a smaller reporting company)		Smaller reporting company ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of May 13, 2016, there were 432,213 units outstanding of the registrant’s common units.

---

---

 

  

ALST CASINO HOLDCO, LLC

 

TABLE OF CONTENTS

 

		PART I—FINANCIAL INFORMATION
ITEM 1.		FINANCIAL STATEMENTS.	2
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	8
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	15
ITEM 4.		CONTROLS AND PROCEDURES.	15
		PART II—OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS.	16
ITEM 1A.		RISK FACTORS.	16
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	16
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES.	16
ITEM 4.		MINE SAFETY DISCLOSURES.	16
ITEM 5.		OTHER INFORMATION.	16
ITEM 6.		EXHIBITS.	17
		SIGNATURES

 

 

PART I—FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

ALST CASINO HOLDCO, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ALST CASINO HOLDCO, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

  

ALST CASINO HOLDCO, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

  

 

ALST CASINO HOLDCO, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

 

 

 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Background

 

The following discussion and analysis of our results of operations and financial condition for the three months ended March 31, 2016 and 2015 should be read in conjunction with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015.

 

ALST Casino Holdco, LLC (the “Company,” “we,” “us” or “our”), a Delaware limited liability company, was formed on May 11, 2011. We were formed to acquire substantially all of the equity interests of Aliante Gaming, LLC (“Aliante Gaming”) pursuant to its joint plan of reorganization under Chapter 11 of the United States Bankruptcy Code. The reorganization was completed on November 1, 2011 (the “Effective Date”), resulting in Aliante Gaming, the owner and operator of the Aliante Casino + Hotel, previously known as Aliante Station Casino + Hotel located in North Las Vegas, Nevada (the “Casino”), becoming our wholly owned subsidiary. The casino is a full-service casino and hotel offering high quality accommodations, gaming, dining, entertainment, retail and other resort amenities. Prior to November 1, 2011, we conducted no operations and had no material assets or liabilities.

 

On November 1, 2011, the Company and Aliante Gaming entered into a senior secured credit facility (the “Senior Secured Credit Facility”) with the holders (the “Lenders”) of our membership interests (the “Common Units”), also referred to as “Members.” The Lenders own 100% of our Common Units. The Senior Secured Credit Facility is further described under “Liquidity and Capital Resources.”

 

Merger with Wholly-Owned Subsidiary of Boyd Gaming Corporation

 

On April 21, 2016, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Boyd Gaming Corporation (“Boyd”), pursuant to which, subject to the terms and conditions set forth therein, a newly formed, wholly-owned subsidiary of Boyd will merge with and into the Company (the “Merger”) with the Company as the surviving entity, such that following the Merger, the Company will become a wholly-owned subsidiary of Boyd.

 

 

Upon the terms and subject to the conditions of the Merger Agreement, Boyd will pay for the benefit of holders of the Company’s membership interests $400 million in cash, less the amount of the Company’s outstanding indebtedness and less the amount of certain Company expenses (the “Merger Consideration”).

 

Pursuant to the Merger Agreement, upon the closing of the Merger, each issued and outstanding membership unit will automatically be cancelled and converted into the right to receive a portion of the Merger Consideration as allocated in accordance with the terms for distributions provided for in the Company’s Amended and Restated Operating Agreement, dated November 1, 2011.

  

The completion of the Merger is subject to customary conditions and the receipt of all required regulatory approvals, including, among others, approval by the Nevada Gaming Commission and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Subject to the satisfaction or waiver of conditions in the Merger Agreement, the Company currently anticipates the transaction will close during the third quarter of 2016.

 

Overview

 

Our operating results are greatly dependent on the level of gaming revenue generated at the Casino. Gaming revenue is generally defined as gaming wins less gaming losses. A substantial portion of our operating income is generated from our gaming operations, primarily from slot play. We use our non-gaming revenue departments to drive customer traffic to the Casino. The majority of our revenue is cash-based, and as a result, fluctuations in our revenues have a direct impact on our cash flows from operations. Additionally, our business is capital intensive, and we rely heavily on the ability of the Casino to generate operating cash flow to repay debt financing and fund maintenance capital expenditures.

 

Promotional allowances consist primarily of free slot play and complimentary food and beverages furnished to customers. Upon redemption, the retail value of such services is included in the respective revenue classifications and is then deducted as promotional allowances. We calculate income from operations as net revenues less total operating costs and expenses. Income from operations represents only those amounts that relate to operations and excludes interest income, interest expense and other non-operating income and expenses.

 

We consider various performance measures in assessing financial condition and results of operations including fluctuations in revenues, expenses and margins as compared to prior periods and internal plans. Additionally, we measure changes in selling, general and administrative expenses as a percent of net revenues, which indicate management’s ability to control costs. We also evaluate our profitability based upon Adjusted EBITDA (see “- Results of Operations” for additional information), which represents earnings before interest, taxes, depreciation and amortization, restructuring and other charges and other non-recurring items, as applicable. The measures listed above are not a comprehensive list of all factors considered by us in assessing our financial condition and operating performance, and we may consider other individual measures as required by trends and discrete events arising in a specific period, but these are the key indicators.

 

We are organized as a limited liability company and are not subject to federal income taxes. Accordingly, a provision for income taxes is not included in our condensed consolidated financial statements.

 

Results of Operations

 

The following table highlights the results of operations and reconciles Adjusted EBITDA to net income for the three months ended March 31, 2016 as compared to the prior year period (in thousands, except percentages):

 

		Three Months Ended
		March 31, 2016				March 31, 2015				Percent Change
Net revenues		$	22,653			$	19,974				13.4	%
Adjusted EBITDA(a)		$	5,799			$	4,529				28.0	%
Less:
Depreciation and amortization			1,244				1,244				n/m
(Gain) on disposal of assets, net			-				(129	)			n/m
Operating income			4,555				3,414				33.4	%
Interest expense, net			(1,187	)			(1,331	)			-10.8	%
Net income		$	3,368			$	2,083				61.7	%

  

 

(a)

EBITDA, earnings before interest, taxes, depreciation and amortization, is a widely used measure of operating performance in the gaming industry. We have traditionally used adjusted EBITDA when evaluating the Casino’s operating performance because we believe that the inclusion or exclusion of certain non-cash recurring, non-recurring items is necessary to present the most accurate measure of the Casino’s operating results and as a means to assess results period over period. We refer to the financial measure that adjusts for these items as Adjusted EBITDA. We believe, when considered with measures calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), Adjusted EBITDA is a useful financial performance measurement for assessing the Casino’s operating performance and is used by management in making financial and operational decisions. In this regard, Adjusted EBITDA is a key metric used by us in our budgeting process, when calculating returns on investment of existing and proposed projects and in the evaluation of incentive compensation related to property management. Adjusted EBITDA consists of net income (loss) less interest, taxes, depreciation and amortization and other non-recurring items, as applicable. We believe that while items excluded from Adjusted EBITDA may be recurring in nature and should not be disregarded in evaluation of the Casino’s operating performance, it is useful to exclude such items when analyzing current results and trends compared to other periods because these items can vary significantly depending on specific underlying transactions, the ability of management to control such items or events and may not be comparable between the periods being presented. Also, we believe excluded items may not relate specifically to the Casino’s operating trends or be indicative of future results. For example, lease terminations will be significantly different in periods when we terminate a lease agreement and it is not expected to be comparable period over period, nor is the amount expected to follow any particular trend from period-to-period. Therefore, we use Adjusted EBITDA as the primary measure of the Casino’s operating performance. We believe that our Members use Adjusted EBITDA as an appropriate financial measure in determining the value of their investment. To evaluate Adjusted EBITDA and the trends it depicts, the components should be considered. The impact of interest, taxes, depreciation and amortization, and other non-recurring items, as applicable, each of which can significantly affect our results of operations and liquidity, should be considered in evaluating our operating performance, and cannot be determined from Adjusted EBITDA. Adjusted EBITDA is used in addition to, and in conjunction with, GAAP measures and should not be considered as an alternative to net income (loss), or any other GAAP operating performance measure. To compensate for the inherent limitations of the disclosure of Adjusted EBITDA, we provide relevant disclosure of our depreciation and amortization, interest and other items in our reconciliations to GAAP financial measures and condensed financial statements, all of which should be considered when evaluating our performance. In addition, it should be noted that not all gaming companies that report Adjusted EBITDA or adjustments to such measures, may calculate Adjusted EBITDA, or such adjustments, in the same manner as us, and therefore, our measure of Adjusted EBITDA may not be comparable to similarly titled measures used by other gaming companies.

 

 

The following table highlights the various sources of revenues and expenses for the three months ended March 31, 2016 as compared to the prior year period (in thousands, except percentages):

 

		Three Months Ended
		March 31, 2016				March 31, 2015				Percent Change
Casino revenues		$	17,370			$	15,224				14.1	%
Casino expenses			7,057				6,003				17.6	%
Profit Margin			59.4	%			60.6	%
Food and beverage revenues		$	4,365				3,940				10.8	%
Food and beverage expenses			3,449				3,132				10.1	%
Profit Margin			21.0	%			20.5	%
Room revenues		$	1,863			$	1,717				8.5	%
Room expenses			887				750				18.3	%
Profit Margin			52.4	%			56.3	%
Other revenues		$	906				826				9.7	%
Other expenses			332				355				-6.5	%
Profit Margin			63.4	%			57.0	%
Selling, general and administrative expenses		$	5,129				5,205				-1.5	%
Percent of net revenues			22.6	%			26.1	%

 

Casino. Casino revenues increased by $2.1 million, or 14.1% for the three months ended March 31, 2016 as compared to the three months ended March 31, 2015 primarily due to a 6.4% increase in table games drop, and an 11.5% increase in slot handle. Both increases are primarily a result of an increase in gaming patron visitation. Casino expenses increased 17.6% to $7.1 million for the three months ended March 31, 2016 as compared to $6.0 million for the three months ended March 31, 2015, primarily due to an increase in expenses associated with our marketing efforts. The casino operating margin decreased to 59.4% for the three months ended March 31, 2016 as compared to 60.6% for the three months ended March 31, 2015 as a result of the increase in marketing expenses.

 

Food and Beverage. Food and beverage revenues increased 10.8% to $4.4 million for the three months ended March 31, 2016 as compared to $3.9 million for the prior year period, primarily as a result of increased visitor volume. Food and beverage expenses increased $317,000 or 10.1% primarily as a result of increased costs associated with increased revenues. The food and beverage operating margin increased to 21.0% for the three months ended March 31, 2016 as compared to 20.5% for the three months ended March 31, 2015 as a result of an increase in average check for meals served, together with a decrease in food costs.

 

Room. The following table shows key information for hotel operations:

 

		Three Months Ended
		March 31, 2016				March 31, 2015				Percent Change
Occupancy			93	%			92	%
Average daily rate		$	97			$	94				3.4	%
Revenue per available room		$	91			$	87				4.7	%

 

Room revenues increased by 8.5% for the three months ended March 31, 2016 as compared to the prior year period. The increase is primarily due to higher occupancy during non-peak periods and a 3.4% increase in the average daily room rate. Room expenses also increased 18.3% for the three months ended March 31, 2016 as compared to prior year period due to costs associated with increased occupancy, the increased cost of linen services and the increased cost of other guest amenities.

 

Other Revenues and Expenses. Other revenues primarily include income from leased outlets, the gift shop, the call center, and entertainment. Other revenues increased by 9.7% during the three month ended March 31, 2016 as compared to the same period in the prior year, primarily as a result of an increase in the percentage rent from leased outlets. The 6.5% decrease in other expenses is primarily the result of cost decreases that correspond to the call center.

 

 

Selling, General and Administrative (“SG&A”). SG&A expenses decreased by approximately 1.5% for the three months ended March 31, 2016 as compared to the prior year period due to a decrease in utility costs.

 

Depreciation and Amortization. Depreciation and amortization remained the same for the three months ended March 31, 2016 as compared to the prior year.

  

Operating Income. As a result of the factors discussed above, operating income increased by approximately 33.4% for the three months ended March 31, 2016 as compared to the prior year period.

 

Interest Expense. Our outstanding indebtedness at March 31, 2016, excluding unamortized debt discount of $5.1 million was approximately $49.1 million compared to approximately $59.3 million, excluding unamortized debt discount of $7.6 million as of March 31, 2015. Interest expense related to our Senior Secured Credit Facility approximated $724,000 for the quarter ending March 31, 2016. Also included in interest expense is a $0.4 million charge for the amortization of debt discount. The Senior Secured Loans bear interest at a rate to be elected by Aliante Gaming, such rate being either (i) 10% per annum, which interest will be added to the principal amount of the Senior Secured Loans quarterly in arrears and subsequently treated as principal of the Senior Secured Loans, or (ii) 6% per annum, which interest will be payable in cash quarterly in arrears. The Company elected to begin paying cash interest effective June 30, 2014. 

 

Net Income. As a result of the factors discussed above, net income for the three months ended March 31, 2016 was $3.4 million, compared to $2.1 million for the three months ended March 31, 2015.

 

Liquidity and Capital Resources

 

Our cash flows will be affected by a variety of factors, many of which are outside of our control, including recovery of the local gaming market, recovery of the housing market and community surrounding the Casino, competition and other general business conditions. We believe that our available cash and cash flows from our operations will provide sufficient liquidity to fund our cash requirements and capital expenditures for 2016, see “Risk Factors — We have limited liquidity and capital resources and may be unable to generate sufficient cash flows to finance all operating expenses, working capital needs and capital expenditures.” We expect to fund future capital expenditures for maintenance of the Casino through cash generated from our operating activities and we expect that we will generate sufficient income and liquidity to meet all of our operating cash requirements. Our results for future periods are subject to numerous uncertainties which may result in liquidity problems, which could in turn affect our ability to meet our obligations while attempting to meet competitive pressures or adverse economic conditions.

 

On April 21, 2016, we entered into a definitive merger agreement with Boyd Gaming Corporation, pursuant to which, subject to the terms and conditions set forth therein, a newly formed, wholly-owned subsidiary of Boyd Gaming Corporation will merge with and into us and we will be the surviving entity, such that following the merger we will be a wholly-owned subsidiary of Boyd Gaming Corporation. Subject to the satisfaction or waiver of conditions, we currently anticipate that the merger will close during the third quarter of 2016.

 

On April 25, 2016, Aliante Gaming entered into a Revolving Credit Facility with Wells Fargo Bank, National Association, in the initial principal amount of up to $50.0 million. The Company guaranteed the Revolving Credit Facility. The Revolving Credit Facility provides for three options to increase the principal amount of the Revolving Credit Facility in an aggregate principal amount of up to $20.0 million. The Revolving Credit Facility will mature on April 24, 2021 and interest will accrue at (i) LIBOR or (ii) a base rate, plus a margin based on the Company’s total leverage ratio. Aliante Gaming borrowed the full $50.0 million under the Revolving Credit Facility on April 25, 2016 and used the proceeds to refinance existing indebtedness under the Senior Secured Loan and to pay fees, commissions and expenses incurred in connection with the Revolving Credit Facility and other general business purposes of the Company.

 

The Revolving Credit Facility contains customary events of default and covenants, including a financial covenant that requires the Borrower to (a) maintain a leverage ratio (defined in the Credit Agreement) of at least (i) 4.00:1.00 until June 29, 2017, (ii) 3.75:1.00 from June 30, 2017 to June 29, 2018 (iii) 3.50:1.00 from June 30, 2018 to June29, 2019, (iv) 3.00:1.00 from June 30, 2019 to June 29, 2020 (v) 2.50:1.00 from June 30, 2020 to June 29, 2021, and (vi) 2.00:1.00 from June 30, 2021, (b) have a minimum fixed charge coverage ratio at the end of any fiscal quarter of not less than 1.05:1.00 and (c) a minimum adjusted EBITDA of the Loan Parties at the end of any fiscal quarter of not less than $12.0 million. The Company’s obligations to the Lender are secured by substantially all of the Company’s assets. In the event that the Merger with Boyd is consummated (which would be a change in control under the Revolving Credit Facility), the outstanding obligations under the Revolving Credit Facility will be paid to Wells Fargo Bank from the merger consideration.

 

  

Senior Secured Credit Facility

 

On November 1, 2011, the Company and Aliante Gaming entered into the Senior Secured Credit Facility, which provided for $45.0 million in principal amount of Senior Secured Loans, which were deemed made on the same date without any funding being provided. The Senior Secured Credit Facility represented an already outstanding obligation of Aliante Gaming as of November 1, 2011 and provided for interest to be paid at a rate to be elected by Aliante Gaming, such rate being either (i) 10% per annum, payable in kind and added to the principal amount of the Senior Secured Loans quarterly in arrears and subsequently treated as principal of the Senior Secured Loans, or (ii) 6% per annum, which interest will be payable in cash quarterly in arrears. Effective June 30, 2014 Aliante Gaming elected the cash interest payment option with accrued interest being payable in kind through June 30, 2014. As a result of accruing interest in kind through June 30, 2014, and the $10 million pay down in the second quarter of 2015, the principal outstanding balance as of March 31, 2016 and December 31, 2015 was $48.5 million. The Company paid cash interest during the period ending March 31, 2016 of $724,000. As of April 25, 2016 there was no availability for borrowings under the Senior Secured Credit Facility. The outstanding principal amount of the Senior Secured Loans and all accrued and unpaid interest thereon was paid in full on April 25, 2016.

 

The Senior Secured Credit Facility was guaranteed by the Company and by each domestic wholly owned subsidiary of Aliante Gaming and was secured by a first-priority (a) pledge of 100% of the Company’s equity interest in Aliante Gaming, (b) pledge of 100% of the equity interests in Aliante Gaming’s domestic subsidiaries (if any) and 65% of the equity interests of Aliante Gaming’s “first-tier” foreign subsidiaries (if any) and (c) security interest in substantially all of Aliante Gaming’s tangible and intangible assets, as well as those of each subsidiary guarantor (if any), in each case, other than any assets that may not be pledged pursuant to applicable gaming laws and subject to customary exceptions. The Senior Secured Credit Facility included various covenants and mandatory prepayments which are customary for similar types of financings and did not contain any financial maintenance covenants.

 

Year Ending December 31, 2016

 

Our primary cash requirements for the remainder of 2016 are expected to include approximately $2.4 million for maintenance capital expenditures and $1.2 million for interest payments on indebtedness. We do not expect to pay dividends to the Common Unit Holders in 2016. We had $20.0 million in cash and cash equivalents as of March 31, 2016.

 

Three months ended March 31, 2016 and 2015

 

The following table summarizes our historical cash flows (in thousands):

 

		Three Months Ended
		March 31, 2016				March 31, 2015
Net cash provided by operating activities		$	2,838			$	4,706
Net cash used in investing activities			(630	)			(601	)
Net cash used in financing activities			(40	)			(37	)
Net increase in cash and cash equivalents		$	2,168			$	4,068

 

For the three months ended March 31, 2016, net cash provided by operating activities was $2.8 million as compared to $4.7 million of cash used in operating activities for the three months ended March 31, 2015. The decrease in cash flows from operating activities is primarily the result of changes in net working capital. For the three months ended March 31, 2016 and March 31, 2015, cash used in investing activities primarily consisted of capital expenditures. Cash used in financing activities represents principal payments on debt for the three months ended March 31, 2016 and March 31, 2015. There were no distributions to the Members during the three months ended March 31, 2016 and March 31, 2015.

 

Off Balance Sheet Arrangements

 

As of March 31, 2016, we did not have any off-balance sheet arrangements that have had or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Contractual Obligations

 

As of March 31, 2016, there were no material changes to the contractual obligations previously reported under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (the “SEC”) on March 28, 2016.

 

 

Critical Accounting Policies

 

A description of our critical accounting policies can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 28, 2016.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking statements. Such statements contain words such as “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “may,” “will,” “might,” “should,” “could,” “would,” “seek,” “pursue,” and “anticipate” or the negative or other variation of these or similar words, or may include discussions of strategy or risks and uncertainties. Forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements concerning:

 

●

projections of future results of operations or financial condition;

 

●

expectations regarding our business and results of operations;

 

●

expenses and our ability to operate efficiently;

 

●

expectations regarding trends that will affect our market and the gaming industry generally and the impact of those trends on our business and results of operations;

 

●

our ability to comply with the covenants in the agreements governing our outstanding indebtedness;

 

●

our ability to meet our projected debt service obligations, operating expenses and maintenance capital expenditures;

 

●

expectations regarding the availability of capital resources; and

 

●

the impact of regulation on our business and our ability to maintain necessary approvals for our property.

 

Any forward-looking statement is based upon a number of estimates and assumptions that, while considered reasonable by us, is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, and are subject to change. Actual results of operations may vary materially from any forward-looking statement made herein. Forward-looking statements should not be regarded as a representation by us or any other person that the forward-looking statements will be achieved. Undue reliance should not be placed on any forward-looking statements. Some of the contingencies and uncertainties to which any forward-looking statement contained herein is subject include, but are not limited to, the following:

 

●

the effects of intense competition that exists in the gaming industry;

 

●

the risk that new gaming licenses or gaming activities, such as internet gaming, are approved and result in additional competition;

 

●

the risk that we are dependent on one property for all of our cash flow;

 

●

the impact of extensive regulation from gaming and other government authorities on our ability to operate our business and the risk that regulatory authorities may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines or take other actions that adversely affect us;

 

●

risks associated with changes to applicable gaming and tax laws could have a material adverse effect on our financial condition; and

 

●

the impact of general business conditions, including competitive practices, changes in customer demand and the cyclical nature of the gaming and hospitality business generally, and general economic conditions on our business and results of operations.

 

 

●

our ability to retain and hire key personnel and maintain relationships with customers, suppliers and other business partners pending the consummation of the Merger;

 

●

potential legal proceedings that may be instituted against the Company and/or others related to the Merger Agreement with Boyd Gaming Corporation;

 

●

limitations placed on the Company’s ability to operate the business by the Merger Agreement with Boyd Gaming Corporation;

 

●

the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement with Boyd Gaming Corporation

 

●

satisfaction of the closing conditions to the Merger, including receipt of regulatory approvals;

 

●

the risk that the contemplated Merger will not occur;

 

●

the negative effects from the pendency of the contemplated Merger;

 

You should consider the areas of risk and uncertainty described elsewhere in this Quarterly Report on Form 10-Q, as well as those discussed under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 28, 2016. Except as may be required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As of March 31, 2016, there were no material changes to the information previously reported under “Item 7A. Quantitative and Qualitative Disclosures About market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 28, 2016.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosure Controls and Procedures

 

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of its Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). The design of any system of control is based in part upon certain assumptions about the likelihood of future events, and we cannot assure that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective and designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Internal Control Over Financial Reporting

 

During the quarter ended March 31, 2016, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to affect, our internal control over financial reporting.

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

The Company is currently a party to litigation arising in the ordinary course of business. As with all litigation, no assurance can be provided as to the outcome, and litigation inherently involves significant costs.

 

ITEM 1A. RISK FACTORS.

 

A description of our risk factors can be found in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 28, 2016. Additional risk factors that may affect future results are listed below. This information should be considered carefully, together with other information in this report and other reports and materials we file with the Securities and Exchange Commission.

 

Factors That May Affect Future Results

 

The proposed merger with Boyd Gaming Corporation may disrupt our business.

 

As previously disclosed, on April 21, 2016 we entered into a Merger Agreement with Boyd, pursuant to which, subject to the terms and conditions set forth therein, a newly-formed wholly-owned subsidiary of Boyd will merge with and into the Company, with the Company as the surviving entity, such that following the Merger, the Company will be a wholly-owned subsidiary of Boyd. The Merger, whether or not consummated, may result in a loss of key personnel and may disrupt our sales and marketing or other key business activities, including our relationships with third parties, including customers, which may have an adverse impact on our financial performance. The Merger Agreement in general requires us to operate our business in the ordinary course pending consummation of the Merger.

 

The ability to complete the Merger is subject to consents and approvals from government entities and if the Merger does not occur, we will have incurred significant expenses.

 

The obligation of Boyd to complete the Merger is subject to several conditions, including the receipt of certain regulatory approvals, including the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1974, as amended, and the approval of certain other governmental entities that hold regulatory, licensing or permit authority over us and Boyd. The obligation of each party to consummate the Merger is also conditioned upon the accuracy of the other party’s representations and warranties, the absence of a material adverse effect involving the other party, and the other party having performed in all material respects its obligation under the Merger Agreement. These conditions are described in more detail in the Merger Agreement, which is filed as an exhibit to this Form 10-Q. There is no assurance that each of the conditions set forth in the Merger Agreement will be satisfied or that the Merger will occur when or as expected. Additionally, we have incurred and will continue to incur substantial legal and other professional fees and expenses in connection with the Merger, which must be paid even if the Merger is not completed.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

 

ITEM 6. EXHIBITS.

 

Exhibit Number		Description
2.1		Agreement and Plan of Merger by and among ALST Casino Holdco, LLC, Boyd Gaming Corporation and Boyd TCII Acquisition, LLC, a wholly-owned subsidiary of Boyd Gaming Corporation, dated April 21, 2016,
10.1		Amendment to Executive Employment Agreement by and among ALST Casino Holdco, LLC, Aliante Gaming, LLC and Robert Schaffhauser dated as of April 4, 2016.
10.2		Credit Agreement between Aliante Gaming, LLC, as borrower and Wells Fargo Bank, National Association, as administrative agent and as a Lender dated April 25, 2016 is hereby incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 28, 2016.
10.3		Security Agreement by Aliante Gaming, LLC and ALST Casino Holdco, LLC in favor of Wells Fargo Bank, National Association dated April 25, 2016 is hereby incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed with the Securities and Exchange commission on April 28, 2016.
10.4		Deed of Trust, Assignment of Rents and leases, Security Agreement and Fixture Fling made by Aliante Gaming, LLC in favor of First American Title Insurance Company, a California corporation, as trustee, for the benefit of Wells Fargo Bank, National Association dated April 25, 2016 is hereby incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 28, 2016.
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase.
101.DEF		XBRL Taxonomy Extension Definition Linkbase.
101.LAB		XBRL Taxonomy Extension Label Linkbase.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase.

 

 

SIGNATURE

 

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.

 

 

	ALST CASINO HOLDCO, LLC, Registrant
Dated: May 13, 2016	By:	/s/ SOOHYUNG KIM
		Name:	Soohyung Kim
		Title:	Manager, Chief Executive Officer and Secretary