05-58 Revised ..
Resolution No. 05-58
Revised
RESOLUTION
ACKNOWLEDGING AND CONSENTING TO ASSIGNMENT OF CERTAIN
INTERESTS IN ELGIN RIVERBOAT RESORT
WHEREAS,the City of Elgin and Elgin Riverboat Resort("Elgin Riverboat")have entered
into that certain Amended and Restated Ground Lease Agreement dated December 2, 1998, but
effective for all purposes as of January 20, 1994 (the "Ground Lease");
WHEREAS,consistent with a resolution adopted by the City Council of the City of Elgin on
December 16, 1992,the City of Elgin has acknowledged and agreed,pursuant to Section 23 of the
Ground Lease,that Elgin Riverboat is a joint venture consisting of: (i)Nevada Landing Partnership,
an Illinois general partnership,which is a subsidiary of Mandalay Resort Group("Mandalay"),as a
50%joint venture partner;and(ii)RBG,L.P.,an Illinois limited partnership,which is an affiliate of
Hyatt Development Corporation, as the other 50%joint venture partner;
WHEREAS, by means of a merger transaction involving Mandalay and MGM MIRAGE
("MGM"),MGM will acquire Mandalay and,as a result,will become the indirect owner of Nevada
Landing and its 50%joint venture interest in Elgin Riverboat (the"JV Interest");
WHEREAS, MGM must receive certain approvals from the Illinois Gaming Board before
MGM may acquire indirectly the JV Interest;
WHEREAS,the Illinois Gaming Board only recently became fully constituted and may not
be in a position to take certain actions, including granting MGM the necessary approvals to permit
MGM to acquire indirectly the JV Interest, in a timely manner;
WHEREAS,in order to allow the merger transaction between MGM and Mandalay to close
in a timely manner,Nevada Landing has agreed to place the JV Interest into escrow until such time
as MGM receives all necessary approvals from the Illinois Gaming Board;
WHEREAS, the JV Interest will be returned to Nevada Landing immediately after MGM
receives all necessary approvals from the Illinois Gaming Board;
WHEREAS, MGM has continuously apprised the Illinois Gaming Board staff of the
proposed escrow arrangement and the Illinois Gaming Board staff has reviewed the escrow
transaction documents;
WHEREAS,prior to the consummation of the merger transaction involving Mandalay and
MGM,MGM expects the Illinois Gaming Board to approve the proposed escrow arrangement;and
WHEREAS,the City Council has determined that it is in the best interest of the City of Elgin
to acknowledge and consent to Nevada Landing's assignment of the JV Interest into escrow and,
upon MGM's receipt of all necessary approvals from the Illinois Gaming Board,the return of the JV
Interest to Nevada Landing.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
ELGIN, ILLINOIS:
1. That the City of Elgin pursuant to Section 23C(iii)of the Ground Lease hereby consents
to Nevada Landing's assignment of the JV Interest into escrow and, upon MGM's receipt of all
necessary approvals from the Illinois Gaming Board,the return of the JV Interest to Nevada Landing;
2. That, for purposes of future transfers, the assignment of the JV Interest into escrow,
and, thereafter, the return thereof to Nevada Landing, shall not constitute a failure by either of the
current joint venture partners of Elgin Riverboat to maintain in the aggregate not less than a 51%
ownership interest in Elgin Riverboat; and
3. That the foregoing consent of the City of Elgin shall become effective upon the Illinois
Gaming Board's approval of the proposed escrow arrangement.
s/Ed Schock
Ed Schock, Mayor
Presented: February 23, 2005
Adopted: March 23, 2005
Vote: Yeas: 6 Nays: 0
Attest:
s/Dolonna Mecum
Dolonna Mecum, City Clerk
March 17, 2005
MEMORANDUM
TO: Mayor and Members of the City Council
Olufemi Folarin, City Manager
FROM: William A. Cogley, Corporation Counsel
SUBJECT: Resolution Acknowledging and Approving Assignment of
Certain Interests in Elgin Riverboat Resort
The licensee of the Grand Victoria Casino is Elgin Riverboat
Resort, an Illinois joint venture consisting of Nevada Landing
Partnership and RBG, L. P . , as its joint venture partners . Elgin
Riverboat Resort is also the tenant in the amended and restated
ground lease agreement with the city.
Section 23 of the city' s amended and restated ground lease
agreement provides for a further description of the Elgin Riverboat
Resort joint venture. At the time of the December 1998 amended and
restated ground lease agreement the affiliates of Nevada Landing
Partnership included Circus Circus Enterprises, Inc . , and the
affiliates of RBG, L. P. included entities related to Hyatt
Development Corporation. Since the entry into the amended and
restated ground lease agreement Circus Circus Enterprises, Inc . has
been renamed Mandalay Bay Resort Group. Section 23 of the amended
and restated ground lease agreement provides for certain transfer
rights of the joint venture . Transfers of joint venture interests
beyond those contemplated in Section 23 require the city' s consent .
Mandalay Bay Resort Group and MGM Mirage are currently attempting
to finalize a merger transaction whereby MGM Mirage will acquire
Mandalay Bay Resort and as a result would become the indirect owner
of Nevada Landing and its fifty percent joint venture interest in
the Elgin Riverboat Resort joint venture . MGM Mirage must receive
certain approvals from the Illinois Gaming Board before MGM Mirage
may acquire indirectly the joint venture interests in Elgin
Riverboat Resort . The Illinois Gaming Board does not currently
have a sufficient number of acting members to achieve a quorum and,
consequently, is unable to take any action, including granting MGM
Mirage the necessary approvals to permit MGM Mirage to indirectly
acquire the subject joint venture interest . In order to allow the
merger transaction between MGM Mirage and Mandalay Resort Group to
close in a timely manner, the representatives of the Nevada Landing
Partnership joint venture interest have agreed to place the Nevada
Landing Partnership joint venture interest into escrow until such
time as MGM Mirage receives all necessary approvals from the
Illinois Gaming Board. The Nevada Landing Partnership joint
venture interest would be returned to the direct control of Nevada
Landing interest immediately after MGM Mirage receives all
Mayor and Members of the City Council -2- March 17, 2005
Olufemi Folarin
necessary approvals from the Illinois Gaming Board. MGM Mirage has
apprised the Illinois Gaming Board staff and the two existing
members of the proposed escrow arrangement and has provided the
Illinois Gaming Board staff and members the proposed escrow
transaction documents . Prior to the consummation of the merger
transaction involving Mandalay Resort Group and MGM Mirage, MGM
Mirage expects the Illinois Gaming Board staff to execute a letter
acknowledging the proposed escrow arrangement and stating that the
staff has no objection to the proposed escrow arrangement .
The proposed temporary transfer of the Nevada Landing interest in
the Elgin Riverboat Resort joint venture into escrow requires the
consent of the city under Section 23 of the amended and restated
ground lease agreement . I have reviewed the documents relating to
this matter and it is my opinion that it would be reasonable for
the City Council to accommodate the parties to this transaction and
agree to adopt the resolution acknowledging and approving the
temporary assignment of the Nevada Landing joint venture interest
into escrow. Attached is the proposed resolution.
This matter was originally scheduled on the February 23 , 2005 City
Council agenda. Representatives of Hyatt Development Corporation
which has an interest in RBG, L. P. requested that the matter be
deferred for approximately two weeks to allow the parties to
resolve certain issues. Although not all of those issues have been
finally resolved, MGM Mirage is requesting that the city proceed
with the resolution providing for the city' s consent to the escrow
arrangement so as not to further delay the completion of the merger
transaction between MGM Mirage and Mandalay Bay Resort Group.
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Attachment