GB Holdings completes exchange offer and consent solicitation for 11% notes

New York, July 23 - GB Holdings Inc. said its wholly owned subsidiary Atlantic Coast Entertainment Holdings Inc. completed its offer to exchange new debt for the outstanding 11% notes due 2005 issued by GB Property Funding Corp. and to seek noteholder consents to proposed indenture changes and certain related items.

The exchange offer and consent solicitation expired as scheduled at 12:01 a.m. ET on July 22, without further extension. As of that deadline, $66.17 million principal amount of the 11% notes, or 60.2% of the outstanding amount, were tendered to Atlantic Coast for exchange, up slightly from the $66.13 million (60.1%) announced on July 14, when the offer had been last extended.

The company said that upon the expiration of the consent solicitation and exchange offer, it consummated a series of transactions which resulted in the transfer of the assets of The Sands Hotel & Casino in Atlantic City, NJ., to Atlantic Coast's subsidiary, ACE Gaming LLC, and the mergers of GB Holdings, GB Property Funding Corp. and Greate Bay Hotel and Casino Inc., with GB Holdings Inc. as the surviving corporation.

GB Holdings also fixed July 23 as the payment date for the distribution, on a pro rata basis, to its stockholders of record as of July 22, of 10 million warrants, which under certain conditions will allow the warrant holders to purchase a total of 2.75 million shares of common stock of Atlantic Coast for one cent per share, representing 27.5% of Atlantic Coast's outstanding common stock.

As previously announced, GB Holdings - an Atlantic City-based gaming company, controlled by financier Carl Icahn, which owns The Sands - said on June 2 that Atlantic Coast Entertainment Holdings (a wholly owned subsidiary of Greate Bay Hotel and Casino, which in turn is a wholly owned subsidiary of GB Holdings) had begun a consent solicitation and exchange offer to seek the consent of the holders of the 11% notes due 2005 issued by GB Property Funding Corp. (another wholly owned subsidiary of the company), to certain indenture changes, and was also seeking to exchange new notes for the outstanding bonds.

The company initially said that the consent solicitation and exchange offer would expire at 12:01 a.m. ET on July 1, although this was subsequently extended several times.

Atlantic Coast was seeking GB Property Funding noteholder consent to a) amending the indenture governing the 11% notes, (b) releasing the liens on the collateral securing the 11% notes, and (c) approving the terms of the indenture governing the new 3% notes due 2008 to be issued by Atlantic Coast and guaranteed by its ACE Gaming LLC wholly owned subsidiary.

It said that the new notes would then exchanged, on a dollar-for-dollar basis for the 11% notes, at a ratio of $1,000 principal amount of 3% notes, plus $100 in cash, together with accrued but unpaid interest for each $1,000 principal amount of 11% notes.

The company said that for purposes of the consent solicitation and exchange offer, a holder tendering the 11% notes for exchange will be deemed to have consented.

It said holders could withdraw any 11% notes tendered until the expiration of the exchange offer.

GB also announced that it would hold a special meeting of its stockholders on June 30 to seek approval of the transaction of which the exchange offer is a part.

The company said that the completion of the consent solicitation and exchange offer would require the approval of the company's stockholders, the consent of the New Jersey Casino Control Commission, the exchange of notes by a majority of the holders of the 11% notes, and the effectiveness of the amendments to the indenture governing the 11% notes and of the indenture governing the 3% notes.

On June 30, GB Holdings said that its stockholders had approved the transfer of The Sands to Atlantic Coast Entertainment, Holdings in connection with the previously announced restructuring of its debt. The transfer of The Sands will not be effective until the completion of the consent solicitation and offer to exchange, which was simultaneously extended, the first of several such extensions.

Innisfree M&A Inc. was the solicitation agent for the exchange offer (banks and brokers call collect at 212 750-5833; all others call 888 750-5834).

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