Here is the latest release...LCG's Corporate Update
LAKE CITY GAMING CORP. ("LCG-V")
- Files Amended Prospectus
Steve Kumpf, President of LAKE CITY GAMING CORP. reports:
LCG received a final receipt on November 3, 1998 for an amended prospectus dated October 19, 1998. A copy of the amended prospectus is being filed with BC Securities Commission as an alternate form of Annual Information Form (AIF). The amended prospectus continues to qualify up to 1,000,000 common shares owned by Fred Glasgow (controlling shareholder) and updates a number of changes.
Vernon Relocation
A lease has been signed with 338089 B.C. Ltd, operating as "The Village Green Hotel" (VGH) and Lake City Casinos Limited (LCCL), the wholly owned subsidiary of LCG. The lease is for an initial 10-year term with two renewal options of 5 years at the discretion of LCCL. All final approvals are in place and the project has been in construction since August 1998.
Leasehold improvements, equipment, and cash float are budgeted at $2,175,000. Under the lease agreement VGH will provide LCCL with up to $900,000 of funding at a fixed rate of 8% for year one, and prime plus 1.5% in following years. The loan is amortized over 10 years and can be repaid without penalty or bonus. VGH is also providing $275,000 of tenant inducements to the cost of the project. Net cash outlay for LCCL to complete the project is estimated at $1,100,000 and will be paid from cash on hand. The majority of leasehold improvements and equipment purchases are eligible for recovery through facilities assistance provided by British Columbia Lotteries Corporation (BCLC). LCCL must first make the expenditures and recover these from BCLC at 3% of gross casino revenue.
The new location at the VGH is scheduled for opening in December 1998 and will have initially up to 200 slot machines and 12 tables, compared to 89 slots and 8 tables in its present location. The premises feature over 12,000 S.F. completed in a Santa Fe theme, a strategic high traffic area, and ample parking
Kelowna Relocation
A lease was signed October 1, 1998 between LCCL and the Grand Okanagan Resort Ltd. (Grand). The lease covers 21,000 S.F. of premises, provision for expansion, and an attached parkade with 150 dedicated stalls. The agreement also includes revenue splitting between the Grand and LCCL on a total of 478 stalls. The lease is for an initial 10-year term with two renewal options of 5 years at the discretion of LCCL. Leasehold improvements are budgeted at $2,500,000 plus $600,000 for equipment purchases and cash float requirements to be funded from working capital and operating profits. The majority of these expenditures will be eligible for facilities assistance from BCLC.
The new location at the Grand is under construction and scheduled for opening in May 1999. The casino will have 300 slot machines and 24 tables, compared to 155 slots and 12 tables in its present location. The premises will feature a vaulted entrance with waterfalls based on a Caribbean cruise ship theme. The Grand is under construction with a second tower for additional rooms and will be the largest luxury hotel and conference centre in the interior of the Province. The location is a lake-front hotel on famous Lake Okanagan and adjacent from the multi purpose arena opening in 1999 with capacity for 6,000 people and anticipating 120 events per year.
Penticton Destination Casino
LCCL was one of three applicants to submit an application for a destination casino in Penticton. On August 14, 1998 LCCL was one of two applicants to receive approval in principle subject to successful conclusion of an agreement with BCLC. The initial proposal was submitted on the assumption that LCCL would be the sole casino in the area. In this regard a revised business plan has been submitted to BCLC reflecting the potential of competition. The proposed business plan would see LCCL increase its investment into the project and to share in development assistance along with facility assistance.
Subject to receiving final approvals in calendar 1998 the casino would open in December 1999. The proposed project is 16,500 S.F. based on a Mediterranean theme. Upon completion the new casino is proposed to have 200 slots and up to 20 tables. This location is located on the southern beach-front of Lake Okanagan and would be an addition to the Penticton Lakeside Resort which is a quality full service hotel with over 200 rooms and large banquet/conference facilities.
Investor Relations
On September 18, 1998 Micro Cap was appointed to assist in the investor relations program of LCG. Micro Cap brings over 35 years of related experience in public awareness and corporate communications. The contract was for an initial 3-month term at $6,000 per month plus associated expenses estimated at $2,500 per month.
Working Capital
Working capital as of September 30, 1998 is estimated at $3,000,000 compared to $540,000 as of June 30, 1998. Working capital calculations for September 30, 1998 do not include cash floats of $1,300,000 and accrued facilities assistance of $700,000. The increased cash position reflects the $1,620,000 of net proceeds from the IPO and operating profits. Working capital also reflects over $500,000 already paid in leasehold improvements towards the Vernon and Kelowna relocations.
Subsequent to September 30, 1998 stock options were exercised for which the company received $150,000.
Convertible Debentures
To date $450,000 of promissory notes were converted into 299,997 common shares. This transaction does not affect working capital but does increase book value of the company.
Longer Hours
In October 1998 BCLC announced that casino hours could be extended 3 hours. Kamloops and Kelowna extended operations to 10AM to 2AM effective November 1, 1998. Vernon will be on extended hours in the new location.
TEL: (250) 861-5457 Dale Peterson, Lake City Gaming Corp. FAX: (250) 860-4407
TEL: (877) 642-7622 (Toll Free) Andrew Cook, Micro Cap FAX: (604) 713-8010 FAX: (604) 713-8018
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