-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EUVNMcQiWVIyp+4RQpnPkCy7pG1LYv2ydJzUIGZVW99QHxLDj846Q3q0WdKwW9qX q5yHOASS63zm3DPnp6eMdQ== 0001047469-98-026269.txt : 19980703 0001047469-98-026269.hdr.sgml : 19980703 ACCESSION NUMBER: 0001047469-98-026269 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980417 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980702 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANS WORLD GAMING CORP CENTRAL INDEX KEY: 0000914577 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO DEALERS & GASOLINE STATIONS [5500] IRS NUMBER: 133738518 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-25244 FILM NUMBER: 98659745 BUSINESS ADDRESS: STREET 1: ONE PENN PLAZA STREET 2: STE 1503 CITY: NEW YORK STATE: NY ZIP: 10119-0002 BUSINESS PHONE: 2128263355 MAIL ADDRESS: STREET 1: ONE PENN PLAZA STREET 2: STE 1503 CITY: NEW YORK STATE: NY ZIP: 10119-0002 8-K/A 1 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 April 17, 1998 (Date of earliest event reported) Trans World Gaming Corp. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada 0-25244 13-3738518 ------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) One Penn Plaza, Suite 1503 New York, New York 10119-0002 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 563-3355 --------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, former address and former fiscal year, if changed since last report) Page 1 of 30 Pages Exhibit Index appears on Page 3 1 ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS On April 17, 1998, Trans World Gaming Corp. ("TWG" or the "Company") acquired 90% of the shares of Casino de Zaragoza, S.A., a company incorporated in Zaragoza, Spain which owns an exclusive casino license in the Region of Aragon ("CDZ"). The total consideration for the shares in CDZ was $985,000 (150 million pesetas "ptas") with $235,000 (36 million ptas) previously paid as a deposit and the final payment of $750,000 (115 million ptas) made on May 18, 1998. The underlying assets acquired include furniture, fixtures, gaming equipment and inventories. In addition, the liabilities of CDZ, principally tax debts totaling approximately $7.5 million (1,148 million ptas) were restructured to a total of $4.8 million (734 million ptas) to be paid by CDZ over the next eight years. In connection with the acquisition of CDZ, TWG agreed to pay a total of $650,000 (99 million ptas) for professional and legal expenses, $435,000 (66 million ptas) of which was due and payable on June 30, 1998 with the balance of $215,000 (33 million ptas) payable when the permission to move the license to downtown Zaragoza is received by the Company. The Company plans to operate the casino in its existing location until permission is granted by the government authorities to move to a more favorable location. The Company is taking steps to request that such move be permitted as soon as possible. On May 28, 1998, the Company and Value Partners, Ltd., a Texas limited partnership ("Value Partners"), executed a loan agreement under which TWG borrowed $1 million. The loan is evidenced by an Unsecured Senior Promissory Note (the "Note") in favor of Value Partners, for $1 million due September 24, 1998 with simple interest at the rate equal to 12% per annum. The Company is currently seeking private equity financing from private investors of up to $4 million to repay the Note, recapitalize CDZ and to fund the projected operating losses of CDZ over the next eighteen months. The recapitalization of CDZ in the amount of approximately $1.5 million, which should occur before or during the fourth quarter of 1997, will effectively dilute the 10% of the shares of CDZ not owned by TWG and, as such, TWG will own close to 100% following the recapitalization. There can be no assurances that such financing will be available on terms favorable to TWG, if at all. In the event that financing is unavailable, TWG will be required to repay the Note from cash flows and/or the liquidation of the assets of CDZ. (The description of the agreements set forth above are, by necessity, only summarizes thereof and do not purport to be complete. The full text of such agreements are filed herewith, pursuant to the guidelines set forth in Item 7 (a) (4) of the instructions to Form 8-K.) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS The following financial statements, pro forma financial information and exhibits are filed as part of this report. (a) Financial Statements of the business acquired, prepared pursuant to Regulation S-B and provided to Trans World Gaming Corp. by CDZ. Item Page ---- ---- Report of Arthur Andersen, Certified Public Accountants 5 Consolidated Statement of Shareholders' equity for the 15 year ended December 31, 1997 and unaudited for the three month period ended March 31, 1998 of CDZ 2 Consolidated Statement of Operations for the year ended 16 December 31, 1997 and unaudited for the interim three-month period ended March 31, 1998 of CDZ Consolidated Statement of Cash Flows for the year ended 17 December 31, 1997 and unaudited for the interim three-month period ended March 31, 1998 of CDZ Consolidated Balance Sheets as of December 31, 1997 18 and March 31, 1998 (unaudited) of CDZ (b) Pro forma financial statements required pursuant to Regulation S-B ITEM Trans World Gaming Corp. and Casino de Zaragoza, S.A. Group 19 Pro Forma Condensed Consolidated Financial Statements Pro Forma Condensed Consolidated Statement of Operations - 20 Three-Months ended March 31, 1998 Pro Forma Condensed Consolidated Statement of Operations - Year Ended December 31, 1997 21 Pro Forma Condensed Consolidated Balance Sheet as of 22 March 31, 1998 Notes to Pro Forma Condensed Consolidated Financial Statements 23 EXHIBITS DESCRIPTION Exhibit 2 (iii) Deed of Sale of the Shares of Casino 24 de Zaragoza between Alfonso Fuentes Barrau and Gumarcon S.L. in favor of Trans World Gaming Corp. dated April 17, 1998. Exhibit 20 (iii) Press Release issued by the Company on April 21, 1998 with respect to the acquisition. (Incorporated by reference to the Company's Current Report, Form 8-K filed with the Securities and Exchange Commission on May 4, 1998.) 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRANS WORLD GAMING CORP. Date: July 1, 1998 By: /s/ Dominick J. Valenzano ------------------------- Dominick J. Valenzano Chief Financial Officer 4 CASINO DE ZARAGOZA, S.A. FINANCIAL STATEMENTS AS OF DECEMBER 31,1997 AND MARCH 31, 1998 TOGETHER WITH AUDITORS' REPORT 5 NOTE: THIS REPORT IS SUBJECT TO CHANGES ACCORDING TO THE DELIVERY AND EXAM OF THE OUTSTANDING DOCUMENTATION REQUESTED IN THE ATTACHED LIST. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Casino de Zaragoza, S.A.: 1. We have audited the accompanying balance sheet of Casino de Zaragoza, S.A. as of December 31, 1997, and the accompanying balance sheet as of March 31, 1998, and the related statements of income, shareholder's equity and cash flows for the year ended December 31, 1997 and for the three-month period ended March 31, 1998. These financial statements are the responsibility of Casino de Zaragoza, S.A.'s management. Our responsibility is to express an opinion on these financial statements based on our audits. 2. We conducted our audits in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. 3. The Company has yet to sign the collective agreement with the workers for the years 1994 through 1998, inclusive, and this matter must be arranged with the Works' Committee. In addition, the last collective agreement signed by the Company provided for the payment of retirement bonuses to employees who retire before age 65. The balance sheets as of December 31, 1997 and March 31, 1998 do not include any provision for the liabilities that could result from pay raises, the aforementioned retirement bonus or any other item that could come to light once the collective agreements have been settled. 4. In 1997 the Company dismissed some employees, as a result of which it is now involved in various legal actions that have been brought against it. The balance sheets as of December 31, 1997 and March 31, 1998 do not include any provision for the liability which may result from the outcome of these claims. 5. As a result of the different interpretations to which ruling tax legislation lends itself and the Company's tax treatment of certain transactions, tax contingencies that 6 cannot be objectively quantified could arise in respect of the years still open to inspection. 6. Net worth as per the accompanying balance sheets as of December 31, 1997 and March 31, 1998 is negative by Ptas. 1,055 million and Ptas. 1,086 million, respectively. This situation constitutes a cause for compulsory dissolution unless capital is increased or decreased accordingly, pursuant to the Revised Spanish Corporations Law. In addition, as indicated in Note 11, in the first few months of 1998 the Company signed a composition with creditors in connection with the application for temporary receivership that Casino de Zaragoza, S.A. filed in January 1997. Note 11 indicates the sums and terms agreed for the partial acquittance and deferral with the Company's creditors. In addition, as indicated in Note 7, most of the Company's capital stock was purchased in April 1998 by a new shareholder, who plans to recapitalize the Company. The accompanying financial statements as of December 31, 1997 and March 31, 1998 were prepared on a going-concern basis, although, considering the above circumstances, the Company's ability to continue as a going concern is dependent on the success of its future operations and on the continued support of its shareholders so as to enable it to realize its assets and settle its liabilities for the amounts and according to the classification in the financial statements referred to above, which have been prepared assuming that the Company will continue as a going concern. 7. In our opinion, except for the effects of such adjustments, if any, as might have been required had the outcome of the uncertainties described in paragraphs 3 to 6 above been known, the financial statements referred to above present fairly, in all material respects, the financial position of Casino de Zaragoza, S.A. as of December 31, 1997 and March 31, 1998, and the results of its operations and its cash flows for the year ended December 31, 1997 and the three-month period ended March 31, 1998, in accordance with generally accepted accounting principles in the United States of America. 7 CASINO DE ZARAGOZA, S.A. NOTES TO FINANCIAL STATEMENTS (1) DESCRIPTON OF BUSINESS Casino de Zaragoza, S.A. (hereinafter referred to as the Casino) was founded in 1978, and since then, is located in Alfajarin (Zaragoza). The second article of the Casino's bylaws defines its corporate purpose, basically, as the operation of a gambling casino and appurtenant services, namely bar, restaurant, sitting rooms, show halls, night clubs, athletic facilities and shopping establishments located in the casino's building complex. Since 1992 Casino de Zaragoza, S.A. has owned all of the capital stock of Catering y Gestion, S.L. (see Note 6), which manages the hotel and restaurant located adjacent to the Casino. Up until October 1997, the properties and other assets needed to manage Catering y Gestion, S.L. were owned by and included in the book fixed assets of Casino de Zaragoza, S.A., which did not charge Catering y Gestion, S.L. for the use of those assets. In October 1997, Diputacion General de Aragon (the Aragon Provincial Council) acquired all of the properties that belonged to Casino de Zaragoza, S.A. through an auction (see Note 5). The Casino is subject to the regulations set forth in the Ministerial Order of January 9, 1979, which approved the Gambling Casino Regulations. The Casino obtained a ten-year extension of its business license, valid until December 23, 2000. (2) BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS The accompanying financial statements as of December 31, 1997 and March 31, 1998 were obtained from the accounting records and are presented in accordance with accounting principles generally accepted in the United States, which required certain adjustments and reclassifications to adapt the financial statements to US GAAP. (3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 8 b) CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash in hand and cash in bank current accounts, with original maturities of three months or less. c) TANGIBLE FIXED ASSETS Tangible fixed assets are shown at cost. Expenditure on expansion, modernization or improvement is capitalized as an increased cost of the related assets provided that it increases productivity, capacity or efficiency, or extends the useful lives of these assets. Upkeep and maintenance costs are expensed currently. The Company depreciates its tangible fixed assets on a straight-line basis over the years of estimated useful life of each asset as follows:
----------------------------------------------------------------- Years of estimated useful life ----------------------------------------------------------------- Buildings 50 Technical and commercial installations 8 to 40 Machinery 10 to 12 Tools 6 to 8 Furniture 10 to 15 Data processing equipment 4 Vehicles 7 -----------------------------------------------------------------
d) MARKETABLE SECURITIES AND OTHER SIMILAR INVESTMENTS The criteria applied by the Casino in recording shareholdings in Group companies are at the lower of cost or underlying book value. The Casino has a majority holding in the capital stock of certain companies (see Note 6). The accompanying financial statements do not reflect the movement in the value of these investments which would arise from applying consolidation criteria to majority shareholdings and the equity accounting method to the other shareholdings, the effect of which on the accompanying financial statements would be immaterial. e) INCOME TAXES Period corporate income tax is computed on the basis of book income before tax adjusted by the corresponding permanent differences with regard to the income for tax purposes, i.e. the corporate income tax base, less any abatements and tax credits, excluding withholdings and payments on account. The Casino accounts for income taxes in accordance with Statement of Financial Accounting Standards ('SFAS') No. 109 'Accounting for Income Taxes'. SFAS 109 requires an asset and liability approach for financial accounting and reporting for 9 income tax purposes. Under the asset and liability method, deferred income taxes are recognized on account of the consequences of timing differences and net operating carryforwards by applying the statutory tax rates applicable to future years. Valuation allowances are recorded when it is determined that realization of such amounts are deemed more likely than not to be realized. f) DEFERRED INDEMNITIES The Casino is obligated to compensate employees whom it dismisses, in certain circumstances, pursuant to ruling labor legislation. In 1997 the Casino dismissed some employees, as a result of which it is involved in various legal actions. The balance sheets as of December 31, 1997 and March 31, 1998 do not include any provision for the liability which may result from the aforesaid dismissals, due to the Casino expects to succesfully defend itself. (4) GROUP ACCOUNTS RECEIVABLE, NET Group accounts receivable consist of the following:
---------------------------------------------------------- Thousands of Pesetas ----------------------- 31-12-97 31-3-98 ---------------------------------------------------------- Catering y Gestion, S.L. 55,345 63,331 Los Albares, S.A. 2,330 2,330 Less Provisions (55,345) (63,331) ---------------------------------------------------------- Net 2,330 2,330 ----------------------------------------------------------
The Company has booked an allowance covering the Catering y Gestion, S.L.'s account receivable as of December 31, 1997 and March 31, 1998, considering the financial situation of the company (see Note 6). (5) PROPERTY AND EQUIPMENT At the end of 1997 and of March 1998, property and equipment at cost and accumulated depreciation were as follows:
--------------------------------------------------------------- Thousands of Pesetas -------------------------- 31-12-97 31-3-98 --------------------------------------------------------------- Machinery 47,569 47,569 Accumulated depreciation (29,904) (30,532) -------------------------- 17,665 17,037 -------------------------- Tools 22,508 22,508 Accumulated depreciation (20,567) (20,789) -------------------------- 1,941 1,719 -------------------------- Furniture 178,469 178,469 Accumulated depreciation (168,087) (168,656) -------------------------- 10,382 9,813 -------------------------- Data Processing Equipment 19,315 19,315 Accumulated depreciation (17,944) (18,186) -------------------------- 1,371 1,129 -------------------------- Other 71 71 Accumulated depreciation (70) (71) -------------------------- 1 - -------------------------- Total tangible assets - Cost 267,932 267,932 Total tangible assets - Accumulated depreciation (236,572) (238,234) --------------------------------------------------------------- TOTAL TANGIBLE ASSETS - NET 31,360 29,698 ---------------------------------------------------------------
10 In October 1997 Diputacion General de Aragon (the Aragon Provincial Council) auctioned off all the properties of the Casino, that had been mortgaged or which secured its debt in respect of gambling tax. The properties were auctioned off to settle debt for Ptas. 865 million, while their net book value for the Casino was Ptas. 396 million. Ptas. 469 million in extraordinary revenues obtained on the auction were recorded in the "Other, net" caption (see Note 10). (6) FINANCIAL INVESTMENTS The "Financial investments" caption comprises the following:
Thousands of Pesetas -------------------------------- 31-12-97 31-3-98 -------------------------------- -------------------------------------------------------- Shareholding 123,634 123,634 Other Securities 328 328 Less - Provisions (111,162) (111,162) -------------------------------------------------------- NET 12,800 12,800 --------------------------------------------------------
Set out below is a detail of Group companies (figures in thousands of pesetas):
- --------------------------------------------------------------------------------------------------------------------- Name Catering y Gestion, S.L. Los Albares, S.A. Location Ctra. Nacional II Ctra. Nacional II Km. 343,250 Km. 343,250 Alfajarin (Zaragoza) Alfajarin (Zaragoza) Line of business Lodging Inoperative - --------------------------------------------------------------------------------------------------------------------- Proportion of stock held as of December 31, 1997 100% 50,31% Capital stock as of December 31, 1997 76,000 74,250 Net equity as of December 31, 1997 (97,009) 24,789 Net book value of holding as of December 31, 1997 - 12,472 - --------------------------------------------------------------------------------------------------------------------- Proportion of stock held as of March 31, 1998 100% 50,31% Capital stock as of March 31, 1998 76,000 74,250 Net equity as of March 31, 1998 (103,444) 24,789 Net book value of holding as of March 31, 1998 - 12,472 - ---------------------------------------------------------------------------------------------------------------------
In addition, the "Provisions" caption under liabilities in the accompanying balance sheets as of December 31, 1997 and March 31, 1998 reflects the effect of assuming Ptas. 41.7 million and Ptas. 40.1 million in accumulated losses, respectively, from Catering y Gestion, S.L. (see Note 9). 11 (7) CAPITAL STOCK As of December 31, 1997 and March 31, 1998 the Company's capital stock consisted of 2,500 fully subscribed and paid registered shares of Ptas. 100,000 par value each. As of December 31, 1997 and March 31, 1998, the following companies or individuals had interests of 10% or more in the Company's subscribed capital stock:
---------------------------------------------- Percentage Shareholding ---------------------------------------------- Gumarcon, S.L. 45% Alfonso Fuentes Barrau 45% Pedro Trapote Avecilla 10% ----------------------------------------------
On April 15, 1998, Trans World Gaming Corp. purchased the shares that Gumarcon, S.L. and Alfonso Fuentes Barrau held in Casino de Zaragoza, S.A. (8) TAX MATTERS Set out below are the balances payable to the Spanish tax authorities:
- --------------------------------------------------------------------------------------------------------------------------- Thousands of Pesetas ------------------------------------------------------------------------------- 31/12/97 31/3/98 ------------------------------------------------------------------------------- Temporary Temporary receivership Rest Total receivership Rest Total - --------------------------------------------------------------------------------------------------------------------------- Diputacion General de Aragon: -Gambling tax 504,563 250,076 754,639 504,563 287,764 792,327 City Council of Alfajarin (Tax on business activities, property tax) 50,590 30,342 80,932 50,590 26,293 76,883 Central tax authorities: -Personal income tax - 48,239 48,239 - 62,265 62,265 -Value added tax - 3,074 3,074 - 3,127 3,127 Social Security authorities 119,194 69,090 188,284 119,194 85,205 204,399 Other - 983 983 - 1,001 1,001 ------------------------------------------------------------------------------- 674,347 401,804 1,076,151 674,347 465,655 1,140,002 - ---------------------------------------------------------------------------------------------------------------------------
On April 17, 1998, the Company signed a composition with creditors (Diputacion General de Aragon, the Social Security authorities and the City Council of Alfajarin) which set the terms of payment for the Casino's debts as of January 25, 1997, which is the date of the Company's application for temporary receivership (see Note 11). Corporate income tax is calculated on the basis of book income, which is determined in accordance with generally accepted accounting principles. Such income need not be equal to the income for tax purposes, i.e. the corporate income tax base. The tax loss carryforwards and maximum terms (under Spanish tax legislation) allowed for offset are as follows:
- ---------------------------------------------------------------------------- Year Thousands of Pesetas Last year for off offset - ---------------------------------------------------------------------------- 1992 27,580 1999 1994 181,717 2001 1995 201,199 2002 1996 165,328 2003 ------- 575,824 - ----------------------------------------------------------------------------
12 The tax base for 1997 and the three first months of 1998 has still to be calculated, but the Company believes that it will have a tax loss which would be available for offset until the year 2004. Under current legislation, losses incurred in a given year can be offset against taxable income in the following seven years. However, the ultimate amount to carry forward may depend on the outcome of a tax inspection of the years in which losses were incurred. The accompanying balance sheet does not reflect the possible impact of offsetting such tax losses. The last five years are open for review of all applicable taxes by the tax authorities. (9) PROVISIONS At the end of 1997 and of March 1998, provisions consist of the following:
- ---------------------------------------------- ------------------------------ Thousands of Pesetas ------------------------------ 31-12-97 31-3-98 - ---------------------------------------------- -------------- --------------- Provisions for subsidiaries' losses (Note 6) 41,664 40,113 Other 18,000 18,000 - ---------------------------------------------- -------------- --------------- 59,664 58,113 - ---------------------------------------------- -------------- ---------------
Provisions for subsidiaries' losses reflect the difference between the Casino's interest in the Catering y Gestion, S.L.'s net equity (see Note 6) and its related account receivable (see Note 4) as of December 31, 1997 and March 31, 1998. (10) REVENUES AND EXPENSES Net sales and operating results were obtained entirely from the Casino's gambling business. The "Other, net" caption is broken down below:
- ------------------------------------------------- -------------------------------------- Thousands of Pesetas -------------------------------------- 31-12-97 31-3-98 - ------------------------------------------------- ------------------- ------------------ Auction of properties (Note 5) 469,280 - Depreciation of assets used by Catering y Gestion, S.L. (Note 1) (21,524) (1,662) Variations in securities price fluctuation allowance and assumption of losses of Catering y Gestion, S.L. (Notes 6 and 9) (64,538) (2,397) Fees paid to receivers and court solicitor for temporary receivership (45,058) (5,336) Other items (28,156) 106 ------------------- ------------------ 310,004 (9,289) - ------------------------------------------------- ------------------- ------------------
13 (11) TEMPORARY RECEIVERSHIP On January 25, 1997, the directors of the Company filed an application in Court of First Instance number 11 of Zaragoza to declare Casino de Zaragoza, S.A. in temporary receivership, which was granted on June 23, 1997. On April 17, 1998, the secondary creditors listed as such in the list of creditors approved by the court and the preferred creditors who attended the Meeting of Creditors voted for the proposed composition, in which Casino de Zaragoza, S.A. agreed to make the following payments:
---------------------------------------------------------------- ------------------ Thousands of Pesetas ---------------------------------------------------------------- ------------------ Social Security authorities 119,194 Partial acquittance of 35.75% of the credits of the rest of the creditors of the composition 206,529 Repayment schedule for the remaining 64.25% Of the credits of the rest of the creditors of the composition: Year 1 - Year 2 - Year 3 37,117 Year 4 37,117 Year 5 37,118 Year 6 37,118 Year 7 111,352 Year 8 111,353 ---------------------------------------------------------------- ------------------ Total credit of the creditors who signed the composition 696,898 ---------------------------------------------------------------- ------------------
The balance due to the Social Security authorities will be paid according to the amounts, terms, methods and other terms expressly agreed by the parties, in accordance with the composition with creditors. On April 28, 1998 the Company submitted a proposal for a composition with the Provincial Directorate of the Social Security Treasury establishing payment terms similar to those set forth in the composition reached with the Company's other creditors. 14 - ------------------------------------------------------------------------------- CASINO DE ZARAGOZA, S.A. - ------------------------------------------------------------------------------- STATEMENT OF SHAREHOLDERS'EQUITY - ------------------------------------------------------------------------------- (THOUSANDS OF PESETAS) - -------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------ SUBSCRIBED INCOME - ------------------------------------------------------------------------------------ CAPITAL ACCUMULATED FOR THE - ------------------------------------------------------------------------------------ STOCK LOSSES YEAR - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ OPENING BALANCE AS OF - ------------------------------------------------------------------------------------ JANUARY 1, 1997 250,000 (1,438,636) - - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Income for the year - - 133,560 - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ CLOSING BALANCE AS OF - ------------------------------------------------------------------------------------ DECEMBER 31, 1997 250,000 (1,438,636) 133,560 - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Transfer to retained earnings - 133,560 (133,560) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Income for the year - - (31,304) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ CLOSING BALANCE AS OF - ------------------------------------------------------------------------------------ MARCH 31, 1998 250,000 1,305,076 (31,304) - ------------------------------------------------------------------------------------
15 CASINO DE ZARAGOZA, S.A. STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 AND FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1998 (Thousands of Pesetas)
- -------------------------------------------------------------------------------- 12/31/97 3/31/98 (12 MONTHS) (3 MONTHS) - -------------------------------------------------------------------------------- REVENUES (NOTE 10) 529.887 135.505 COSTS AND EXPENSES (647.627) (149.034) Operating departments (472.316) (114.522) Selling, general and administrative (175.311) (34.512) INCOME (LOSS) FROM OPERATIONS (117,740) (13.529) OTHER INCOME (EXPENSE) 251,300 (17,775) Interests (58,704) (8.486) Other, net (Note 10) 310.004 (9.289) PROVISION FOR TAXES ON INCOME - - NET INCOME (LOSS) 133.560 (31.304) EARNINGS/(LOSS) PER SHARE 53.42 (12.52) - --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements 16 - -------------------------------------------------------------------------------- CASINO DE ZARAGOZA, S.A. - -------------------------------------------------------------------------------- STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------- (Thousands of Pesetas) - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------- 31-12-97 31-3-98 - ------------------------------------------------------------------------------------------------------- (12 months) (3 months) - ------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- Cash received from customers and other accounts receivable 518,133 131,749 - ------------------------------------------------------------------------------------------------------- Cash paid to suppliers and others accounts payable (444,477) (120,003) - ------------------------------------------------------------------------------------------------------- Cash received from (paid to) subsidiaries (61,729) 2,397 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 11,927 14,143 - ------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- Additions to property, plant and equipment (473) 0 - ------------------------------------------------------------------------------------------------------- Proceeds from asset sales 3,525 0 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 3,052 0 - ------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- (Increase) decrease in financial investments 7,320 (4,169) - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 7,320 (4,169) - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 22,299 9,974 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- Cash and cash equivalents, beginning of year 12,766 35,065 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF YEAR 35,065 45,039 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- Net income 133,560 (31,304) - ------------------------------------------------------------------------------------------------------- ADJUSTMENTS: - ------------------------------------------------------------------------------------------------------- Depreciation and amortization 38,920 1,662 - ------------------------------------------------------------------------------------------------------- Taxes not paid 279,170 55,863 - ------------------------------------------------------------------------------------------------------- Provision for bad debts - Group 64,538 2,397 - ------------------------------------------------------------------------------------------------------- Proceeds from auction of properties (469,280) 0 - ------------------------------------------------------------------------------------------------------- Other provisions 18,000 0 - ------------------------------------------------------------------------------------------------------- (Increase) decrease in accounts receivable (73,483) (4) - ------------------------------------------------------------------------------------------------------- Increase (decrease) in trade accounts payable and other 20,502 (10,719) current liabilities - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- TOTAL ADJUSTMENTS TO NET INCOME 11,927 14,143 - -------------------------------------------------------------------------------------------------------
17 CASINO DE ZARAGOZA, S.A. BALANCE SHEET AS OF DECEMBER 31, 1997 & MARCH 31, 1998 (THOUSANDS OF PESETAS)
- ------------------------------------------------------------------------------------------------------------------------- LIABILITIES & STOCKHOLDERS' ASSETS 12/31/97 3/31/98 EQUITY 12/31/97 3/31/98 - ------------------------------------------------------------------------------------------------------------------------- CURRENT ASSETS 104,123 122,022 CURRENT LIABILITIES 1,148,676 1,197,871 Cash and cash equivalents 35,065 45,039 Accounts payable, trade 33.785 22.333 Short-Term financial investments 15,423 19,592 Taxes (Notes 8 and 11) 1,076,151 1,140,002 Trade accounts receivable 50,506 54,338 Other current liabilities 38.740 35.536 (non-group) Group accounts receivable (Note 4) 2,330 2,330 Prepaid expenses and other 799 723 receivables LONG-TERM DEBT 2.778 2.675 Long-term debt 2.778 2.675 TOTAL NON-CURRENT ASSETS 51,919 50,257 Intangible assets 7,759 7,759 PROVISIONS (NOTE 9) 59.664 58.113 Property and equipment (Note 5) 31,360 29,698 Financial investments (Note 6) 12,800 12,800 STOCKHOLDERS' EQUITY (1,055,076) (1,086,380) Common Stock (Note 7) 250,000 250,000 Accumulated losses (1,438,636) (1,305,076) Profit/Loss 133.560 (31.304) ----------------------- ------------------------------------------------------------ TOTAL LIABILITIES & STOCK TOTAL ASSETS 156,042 172,279 HOLDERS' EQUITY 156.042 172.279 - -------------------------------------------------------------------------------------------------------------------------
18 TRANS WORLD GAMING CORP. PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The following unaudited pro forma financial information is based on the most recent financial statements of the Company which were filed on June 15, 1998 on Form 8-K/a, adjusted to give effect the acquisition of CDZ and the related financing (See ITEM 2: Acquisition and Deposition of Assets.) The pro forma condensed consolidated balance sheet information gives effect to the acquisition of CDZ and the relating financing as if it had occurred on January 1, 1997. The pro forma consolidated statements of operations information gives effect to the acquisition of CDZ and the related financing as if it had occurred at the beginning of the periods for which the statements of operations are presented. The pro forma statements of operations give effect to the following pro forma adjustments: (a) the change in amortization and depreciation expense resulting from the allocation of the purchase price, direct acquisition costs and liabilities acquired net of current assets acquired to the fixed and intangible assets of CDZ and, (b) the change in interest expense resulting from the issuance and repayment of the new debt used to finance the acquisition. The pro forma adjustments are based upon currently available information and upon certain assumptions that management of the Company believes are reasonable. Final purchase adjustments may differ from the pro forma adjustments herein. The following unaudited pro forma financial information should be read in conjunction with the notes thereto includes herewith, with TWG's audited and unaudited financial statements and notes thereto for the periods presented with the CDZ audited and unaudited financial statements thereto for the periods presented. The unaudited pro forma financial information is not necessarily indicative of future operating results or of what would have occurred had the acquisition been consummated at the time specified. 19 TRANS WORLD GAMING CORP. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE DATA)
FOR THE YEAR ENDED DECEMBER 31, 1997 ------------------------------------------------------------------- TWG PRO FORMA PRO FORMA FINANCIAL CDZ PRO FORMA FINANCIAL STATEMENTS (A) HISTORICAL ADJUSTMENTS STATEMENTS ------------------------------ -------------------------------- REVENUES Gaming $9,970 $3,476 $0 $13,446 Truckstop 2,707 0 0 2,707 Consulting 84 0 0 84 ------------- ----------- -------------- ------------- TOTAL REVENUES 12,761 3,476 0 16,237 ------------- ----------- -------------- ------------- TOTAL COSTS AND EXPENSES Gaming 4,932 3,098 0 8,030 Truckstop 2,333 0 0 2,333 Selling, general and 2,655 895 0 3,550 administrative Amortization and depreciation 1,392 255 405 (B) 2,052 Gaming development 39 0 0 39 (Gain) on asset sale 0 (3,078) 0 (3,078) Exchange loss/other expense 132 1,045 0 1,177 ------------- ----------- -------------- ------------- TOTAL COSTS AND EXPENSES 11,483 2,215 405 14,103 ------------- ----------- -------------- ------------- INCOME FROM OPERATIONS 1,278 1,261 (405) 2,134 INTEREST EXPENSE 3,237 385 40 (C) 3,662 ------------- ----------- -------------- ------------- INCOME (LOSS) BEFORE TAXES (1,959) 876 (445) (1,528) TAXES 296 0 0 296 ------------- ----------- -------------- ------------- NET INCOME (LOSS) ($2,255) $876 ($445) ($1,824) ------------- ----------- -------------- ------------- NET INCOME (LOSS) PER COMMON SHARE - BASIC ($0.74) (G) ($0.60) ------------- ------------- ------------- ------------- COMMON SHARES OUTSTANDING 3,044 (G) 3,044
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS PRO FORMA FINANCIAL STATEMENT 20 TRANS WORLD GAMING CORP. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS ENDED MARCH 31,1998 ------------------------------------------------------------------- TWG PRO FORMA PRO FORMA FINANCIAL CDZ PRO FORMA FINANCIAL STATEMENTS (A) HISTORICAL ADJUSTMENTS STATEMENTS ------------------------------ -------------------------------- REVENUES Gaming $2,811 $889 $0 $3,700 Truckstop 482 0 0 482 Consulting 5 0 0 5 ------------ ---------- ------------ ------------ ---------- ------------- ------------ TOTAL REVENUES 3,298 889 0 4,187 ------------ ---------- ------------- ------------ TOTAL COSTS AND EXPENSES Gaming 1,562 751 0 2,313 Truckstop 509 0 0 509 Selling, general and administrative 386 215 0 601 Amortization and depreciation 353 11 102 (B) 466 Gaming development 0 0 0 0 Exchange loss/other expense 111 61 0 172 ------------ ---------- ------------ ------------ ---------- ------------- ------------ TOTAL COSTS AND EXPENSES 2,921 1,039 102 4,062 ------------ ---------- ------------- ------------ INCOME FROM OPERATIONS 377 (150) (102) 125 INTEREST EXPENSE 822 56 0 878 ------------ ---------- ------------- ------------ INCOME (LOSS) BEFORE TAXES (445) (205) (102) (752) TAXES 100 0 0 100 ------------ ---------- ------------- ------------ NET INCOME (LOSS) ($545) ($205) ($102) ($852) ------------ ---------- ------------- ------------ ------------ ---------- ------------- ------------ NET INCOME (LOSS) PER COMMON SHARE - BASIC ($0.18) (G) ($0.28) ------------ ------------ ------------ ------------ COMMON SHARES OUTSTANDING 3,044 (G) 3,044
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS PRO FORMA FINANCIAL STATEMENT 21 TRANS WORLD GAMING CORP. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) MARCH 31, 1998 (IN THOUSANDS)
HISTORICAL --------------------------------- TRANS WORLD CASINO DE PRO FORMA GAMING CORP ZARAGOZA ADJUSTMENTS --------------------------------- ----------- ASSETS CURRENT ASSETS Cash and cash equivalents $3,358 $295 ($1,497) (B) (C) Accounts Receivable 458 372 0 Allowance for doubtful accounts (37) 0 0 Inventories 77 0 0 Short term investments 0 129 0 Other current assets 64 5 0 ------------ ----------- ----------- TOTAL CURRENT 3,920 800 (1,497) ASSETS PROPERTY AND EQUIPMENT - 422 195 0 NET OTHER ASSETS Investment at 75 0 0 equity Goodwill 642 51 4,983 (B) (E) Investment - 21st Century Resorts 11,825 0 0 Deferred debt issuance 1,856 0 0 costs Deposits and deferred costs on 389 0 (178) (F) investments Deferred costs and other assets 304 84 596 (B) ------------ ----------- ----------- TOTAL OTHER 15,091 135 5,401 ASSETS ------------ ----------- ----------- TOTAL ASSETS $19,433 $1,130 $3,904 ------------ ----------- ----------- ------------ ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY/ (DEFICIT) CURRENT LIABILITIES Current portion of long term debt $2,125 $7,478 ($7,478) (D) Accounts payable and accrued expenses 696 380 0 ------------ ----------- ----------- TOTAL CURRENT LIABILITIES 2,821 7,858 (7,478) LONG TERM DEBT NET OF CURRENT PORTION 20,323 18 4,802 (D) PROVISION FOR SUBSIDIARY LOSSES 0 381 0 STOCKHOLDERS' EQUITY/(DEFICIT) Capital stock 3 1,640 (1,640) (E) Additional paid-in-capital 8,896 0 0 Stock warrants outstanding 537 0 0 Accumulated deficit (13,147) (8,767) 8,767 (E) (547) (H) ------------ ----------- ----------- TOTAL STOCKHOLDERS' EQUITY/(DEFICIT) (3,711) (7,127) 6,580 ------------ ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' $19,433 $1,130 $3,904 EQUITY/(DEFICIT) ------------ ----------- ----------- ------------ ----------- -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS PRO FORMA FINANCIAL STATEMENT 22 TRANS WORLD GAMING CORP. NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS A. The TWG Pro Forma Financial Statements are incorporated herein by reference to the Company's Current Report on Form 8-K/A filed with the Securities and Exchange Commission on June 15, 1998, which reported the acquisition of 21st Century Resorts, a.s. by the Company on March 31, 1998. B. The excess of purchase consideration over net liabilities of CDZ along with the related goodwill amortization is summarized as follows:
Goodwill ($ IN THOUSANDS) Purchase Price $ 985 Net liabilities acquired 7,127 Reduction of Spanish tax liability (2,676) Acquisition costs 650 --------- Excess of Purchase Price over net assets acquired (goodwill) $ 6,086 ---------
The excess of purchase price over net assets acquired is being amortized on a straight-line basis over 15 years. Pro forma amortization expense amounted to $405,000,000 and $102,000,000 for the year ended December 31, 1997 and the three months ended March 31, 1998, respectively. C. Reflects an increase in interest expense in connection with the issuance of a $1 million, 120-day note at 12% for the year ended December 31, 1997. On a pro forma basis, the note is assumed to be repaid during 1997, there would be no interest expense incurred during the three months ended March 31, 1998. D. On April 17,1998, TWG and the major creditors of CDZ agreed to reduce the outstanding tax liability of CDZ from $7.5 million to $4.8 million payable over eight years commencing in 2001. The debt has been reclassified from a current liability to a long term obligation. E. Reflects the elimination of the equity of CDZ as a result of the acquisition. F. Reflects the reclassification to Goodwill of a deposit related to the acquisition of CDZ that was paid in 1997. G. Basic earnings per share is computed using the weighted average number of shares outstanding during the reporting period. Diluted earnings (loss) per share and fully diluted common shares outstanding are not presented since the dilutive effects of stock options, warrants and convertible debt is antidilutive. H. Reflects the pro forma adjustments to net income (loss) for the year ended December 31, 1997 of ($445,000) and for the three months ended March 31, 1998 of ($102,000). 23 EX-2 2 EXHIBIT 2 EXHIBIT 2 (iii) DEED OF SALE OF SHARES AUTHENTICATED BY MR. JOSE MARIA BADIA GASCO NOTARY OF ZARAGOZA Pa. De la Independencia, 8 Dpdo, 3 Dcha. - 50004 Zaragoza - Tel. 976 23 61 95 - Fax 976 23 28 37 EXECUTED BY MR. ALFONSO FUENTES BARRUA AND GUMARCON, S.L. IN FAVOR OF "TRANS WORLD GAMING CORP." - AND OTHERS; 15 APRIL 1998: NOTARY REGISTRY NO. 1.388 GP 0966411 24 [Notary seal:] JOSE MARIA BADIA GASO Notary of Zaragoza - ---- NUMBER ONE THOUSAND THREE HUNDRED AND EIGHTY-ONE - ---- BILL OF SALE OF SHARES.- - ---- In Zaragoza, at my residence, on the fifteen of April, nineteen hundred ninety-eight. - ---- Before me, HONORIO ROMERO HERRERO, Notary of the Illustrious College of Zaragoza, acting in substitution of and for the registry of my colleague of this same residence, MR. JOSE-MARIA BADIA GASCO, - ------------------------------------APPEAR: ------------------------------------ - ---- MR. ALFONSO FUENTES BARRAU, of legal age, married, an industrialist, resident of Zaragoza, domiciled at calle Coso No. 66; bearing National Identification No. 17.984.306-D. - ---- For the one party - ---- AND, - ---- MR. ANDREW TOTTENHAM, of legal age, married, a British citizen, domiciled at 28 Killieser Avenue, London 8W24NT (United Kingdom), bearing a valid passport with the number 500076155. - ---- For the other party, - ---- AND MR. ALBERTO CUARTERO RIOS, of legal age, married, an attorney, resident of Zaragoza, domiciled at calle del Doctor Cerrado, number 24, 4th floor left; bearing National Identification Document number 25.140.154-N. - ---- NOW COME: - ---- 1. MR. ALFONSO FUENTES BARRAU, participating on his own behalf and also in his capacity as Single Administrator and in the name of the corporation 'GUMARCON, S.L., domiciled in Madrid, calle de Maldonado, number 4; incorporated for an indefinite period by mans of an instrument authorized by the Madrid notary Mr. Jose-Luis Alvarez Alvarez on March 7,1996, Notary registry number 922; registered in Commercial Registry of Madrid at Volume 10.858, Folio 175, Section 8, page number M-171456, entry 2. - Its assigned Tax Identification Document Number is B-81410300. I hereby transcribe the following excerpts from the Articles of Incorporation of said Company: "...Article 18 - The Company shall be governed and administered by a Single Administrator - ...Article 20 - The Single Administrator shall be responsible for representing the Company in and out of court and in acts and contracts, operations and business transaction of any type. - As such, the Single Administrator may undertake with any individual or legal entity..., acts and contracts of any type, whether concerned with management, ordinary or extraordinary administrative issues, encumbrances, acquisitions, arrangement and sales, transactions, loans, credits, collections and payments, regardless of their nature and consequence, involving either real or personal rights, 25 relative to movable or immovable property,..., with such powers as may be necessary to best accomplish the foregoing, signing for this purpose the appropriate notarized or un-notarized documents, all without prejudice to the specific competencies that the Law accords the General Meeting of Shareholders. - ---- - Any limitation of the representational powers of the administrative body, whether imposed by the corporate bylaws or by decisions of the General Meeting of Shareholders, shall be null and void vis-a-vis third parties, without prejudice to the validity and liability that the Single Administrator may incur with respect to the Company in the case of abuse or misuse of powers or for performing acts not included in the corporate purpose of a binding nature for the Company pursuant to what is set forth in the Joint-stock Companies Act.----"/. The transcribed portions are a faithful copy of the contents of the authorized copy, which I have before me, of the aforesaid Articles of Incorporation, and nothing of what has been omitted restricts, modifies or qualifies what has been inserted. Said gentlemen was named Single Administrator for a term of five years, pursuant to a decision adopted by the General Shareholders Meeting held on 26 August, 1997, which was converted into a public instrument by means of a document authenticated by my absent colleague on 5 September 1997, under Notary Registry number 2.860, which resulted in the aforesaid entry 2 of the above-referenced page number M-171456 in the Commercial Registry of Madrid. He declares that he currently continues to perform the functions of said office. 2. MR. ANDREW TOTTENHAM, participating in his own behalf as well as in the name of the U.S. corporation called "TRANS WORLD GAMING CORP.", domiciled at One Penn Plaza, Suite 1503, New York, 10119 (U.S.A.); incorporated on 20 October, 1993, under registration number 133,738,518. Said gentlemen declares that at this time he is unable to show proof of the aforesaid representation, whereupon the other participants agree that it should be verified at a later time following this proceeding; in my capacity as notary, however, I advise the participants, at whose insistence the execution proceeding is being continued, that the full effectiveness of this instrument remains subject to presentation of the documental proof of the alleged representation or, if available, the confirmation of the aforesaid Entity represented. 3. AND MR. ALBERTO CUARTERO RIOS on behalf of MR. JAIME VACA DE ARRAZOLA BANOS, of legal age, married under the regime of separation of marital property, a resident of Madrid, domiciled at calle de Magallanes, number 1, 9th; bearing National Identification Document Number 313.531-H, who is acting in the capacity of representative pursuant to a power of attorney certified by me today acting in the place of my colleague, Mr. Jose-Maria Badia Gasco, a certified copy of which they place before me. Finding it sufficient, I hereby attach it to this principal document. THEY HAVE, in my opinion, legal capacity for this act. WHO STATE AS FOLLOWS: I. That they have consented to the sale of the registered shares numbered 1 to 2,250, inclusive, of the corporation named "CASINO DE ZARAGOZA, S.A.", domiciled at Alfajarin (province of Zaragoza) Carretera N. II, Km. 343,250; incorporated for an indefinite period by means of an instrument certified by a former notary of this City, Mr. Pascual Gomis Vidal, on 8 May, 1978, with bylaws revised in accordance with the Corporations Act by means of an instrument certified by a 26 former notary of this City, Mr. Nicolas Moreno Badia, on 3 July, 1991, under Notary Registry number 792; registered in the Commercial Registry of this Province at Volume 1069, Folio 41, Page Number Z-2.389, entry 1. Its assigned Tax Identification Document Number is A-500044585. By virtue of a Court order on 25 January, 1997, the Court First Instance of Zaragoza on 25 January, 1997, the Court acknowledged the petition requesting that the Company be declared in SUSPENSION OF PAYMENTS. Said shares belong to: To the company "GUMARCON, S.L.", which owns numbers 1.126 to 2.250, inclusive. They acquired said shares through a purchase from the company "Ibervalles, S.L.", in an instrument certified by the Madrid notary, Mr. Luis Sanz Rodero, on 9 July, 1996, under Notary Registry number 2660, an uncertified copy of which they place before me, which prompts me to advise the executing parties of the necessary warnings. They are fully paid-up. The sellers declare that the shares forming the subject of the sale under this bill of sale are the only ones that they own in the company "CASINO DE ZARAGOZA, S.A.". II. That pursuant to Article 11 of the bylaws of the company, "CASINO DE ZARAGOZA, S.A." the shares of said company may be freely transferred, since the content of said Article, based on the photocopy which they place before me of the aforesaid revised bylaws, reads as follows: "...ARTICLE 11". -TRANSFERABILITY OF SHARES. - The ownership of the shares shall be transmitted by any of the methods established under law, and the Company shall be immediately notified in writing thereof for its recording in the corresponding book and regulatory notification of the competent governmental bodies. - Pending the registration of the Company, or where applicable, of the decision to increase the share capital in the Commercial Registry, the shares may neither be delivered nor transferred..." III. And that the foreign investment arising from the transfer of shares that is formalized in this bill of sale has been authorized: (a) By the General Delegation of Aragon, pursuant to a decision of the Advisor for Economy, Treasury and Development, dated 15 April, 1998, as evidenced by the document which they place before me, issued in four sheets of ordinary paper, single-sided, which I attached hereto. (b) By the Ministry of the Economy and Treasury, General Directorate of Commercial Policy and Foreign Investments dispatched on 30 March, 1998. (c) By the Council of Ministers of the Spanish State, at its meeting held on 20 March, 1998. The preceding authorizations are not properly evidenced, a fax being the sole piece submitted to me, which I append hereto, while advising the executing parties about this lack of certified documentation, which they expressly accept and promise to deliver the original document to me as soon as they obtain it for its subsequent annexation hereto under a separate proceeding. IN VIEW OF THE FOREGOING STATEMENTS 27 THEY HEREBY EXECUTE THE FOLLOWING, FIRST. MR. ALFONSO FUENTES BARRAU, acting on his own behalf and in the name of the company 'GUMARCON, S.L.", sells the aforesaid 2,250 shares, numbered 1 to 2.250, inclusive, of the company "CASINO DE ZARAGOZA, S.A.", free of encumbrances, as follows: 1. To the company "TRANS WORLD GAMING CORP." it hereby sells two thousand two hundred and forty-eight (2.248 shares), numbered 1 to 2.248, inclusive, and the latter, through its designated representative at this proceeding hereby purchases and acquires them. 2. To MR. ANDREW TOTTENHAM it hereby sells one share (1 share), number 2.249, and the latter hereby purchases and acquires it. 3. To MR. JAIME VACA DE ARRAZOLA BANOS it hereby sells one share (1 share), number 2.250, and the latter hereby purchases and acquires it through his designated representative at this proceeding. SECOND. The total price of three sales amounts to ONE HUNDRED TWENTY MILLION PESETAS. The sellers state that, of the total sales amount, they have received before this proceeding, in accordance with their respective shares in the sale, from the purchasers, whose payments were in accordance with their respective shares in the purchases, the amount of FIFTY THOUSAND U.S. DOLLARS, equivalent to SEVEN MILLION SEVEN HUNDRED SEVENTEEN THOUSAND PESETAS, a photocopy of which I have obtained and attach to this principal document. For said amount, the sellers issue to the purchasers a receipt of payment, subject to full collection. And the payment of the balance remains deferred and the purchasers pledge and undertake to make it to the sellers before the eighteenth day of May of the current year, which shall bear a interest of TEN THOUSAND U.S. DOLLARS. The foreign Company certifies the provenance of the amount paid with a certification issued on one folio of ordinary paper by the entity BANKINTER, Paseo de la Constitucion 15, of this City, dated 15 April 1998, which certification I append to the master document. I, the Notary, append hereto both copies of the statements on foreign investments made under this contract. THIRD. The failure to pay the remaining balance of the payment due in the manner stipulated shall entitle the sellers to rescind the sales IPSO JURE, pursuant to the provisions of Article 1.504 of the Civil Code. Should the sellers, in exercise of the authority reserved by them, reacquire what was sold under this contract, the purchasers shall forfeit the FIFTY THOUSAND DOLLARS delivered in partial payment of the price, with the said funds to remain in the possession of the sellers. This contract shall likewise terminate IPSO JURE should the agreement presented by "CASINO DE ZARAGOZA, S.A." at the Creditors Meeting relative to the said Company's 28 suspension of payments not be approved, in which case the purchasers shall forfeit the FIFTY THOUSAND DOLLARS delivered in partial payment of the price, with the said funds to remain in the possession of the sellers, and naturally the purchaser would not be required to pay the portion of the payment that is deferred, and the ownership of the shares would be restored to the sellers. FOURTH. The purchasers state that they are aware of the commercial, legal, accounting and tax situation of the Company "CASINO DE ZARAGOZA, S.A." and its affiliates, and indicate, in particular, that they are fully aware of the current situation of the proceedings in the suspension of payments matter in which it is implicated under number 1/97 before the Eleventh Court of First Instance of Zaragoza. They further state that since before the execution of the private document of sale of 12 September 1997, signed by the parties, they have been receiving ample accounting documentation that exactly reflects the net worth of the Firm, including, INTER ALIA, the balance sheet operating account, Court decisions in the matter of suspension of payments, contracts, Social Security contribution payment forms (TC1 and TC2), as well as a list of all currently pending contingencies in favor or against the Company. The purchasers acknowledge having examined all the documents they have requested to check the accuracy of the accounting documents provided, and also to verify the correctness of the tax, employment, administrative situation, including with the Regional Council of Aragon, the entity which has been assigned jurisdiction over the gaming business in which the concern "CASINO DE ZARAGOZA, S.A." is engaged. The purchasers state the condition of the Firm conforms with the data supplied by the sellers, without their having to make any reclamations on any account. Any obligation derived from the private contracts subscribed between the parties on 12 September 1997 is rescinded and void. The sellers, in signing this contract, sever all ties with the Company "CASINO DE ZARAGOZA, S.A.", and undertake not to exercise any type of action before any official entity which might obstruct directly or indirectly the effective assumption of control and authority over the Company by the purchasers. FIFTH. All of the expenses and taxes in connection with the execution of this document shall be borne exclusively by the purchasers. All statutory reservations and notices have been made including, specifically, those of Article 52 of the Property Transfers Tax Act and Documented Juridical Acts (Royal Legislative Decree 1/1993 of 24 September), and those of the Assessments Act, the parties present having requested that the exemption established under Article 108 of Law 24/1988 be applied to this Contract. Pursuant to the stipulations of the aforesaid Assessments Act, I shall append hereto the corresponding settlement of fees, in a separate folio. As MR. ANDREW TOTTENHAM does not understand Spanish and in accordance with the provisions of Article 150 of the Notarial Regulations, this proceeding is being attended by a sworn interpreter from Spanish into English, MRS. PATRICIA CALLAVED BURGALETA, whose name appears on the list of sworn interpreters of this City furnished by the Association of Notaries of Zaragoza, who is of Spanish nationality and whose identity I verify by means of her national identification document, no. 25,151,496-F, and who states that she translates orally into the said English language, out loud, the reading that I, the Notary, at the election of the parties present and of said interpreter, provide of this notarized document, with the parties hereto indicating their 29 approval of the full contents thereof and signing it thereafter; then, the aforesaid interpreter states, on her personal recognizance, that the contents of this instrument are faithfully represented in the English translation which she has given thereof, and also signs. I, the Notary, do hereby attest that I have verified the identities of the parties hereto from their respective identification documents notes in the introduction, containing photographs and signatures, and everything else contained in this notarized document, which has been drawn up in nine folios of official notarial paper, being all of the same class and series, and bearing the number which appears hereinbelow and the eight numbers immediately preceding it. The signatures and initials of the parties in attendance are affixed hereto. Sealed and signed - Honorio Romero Herrero - Initialed and sealed. 30 -----END PRIVACY-ENHANCED MESSAGE-----