1 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 PUBLIC MEETING NO. 06-10-23 6 7 - - - - - - - - - - - - - - - - - - - 8 9 Monday, October 23, 2006 10 Atlantic City Commission Offices 11 Joseph P. Lordi Public Meeting Room - First Floor 12 Tennessee Avenue and Boardwalk 13 Atlantic City, New Jersey 08401 14 9:43 a.m. to 10:23 a.m. 15 16 17 Certified Shorthand Reporter: Darlene Sillitoe 18 - - - - - - - - - - - - - - - - - - - - - - - - - - - 19 20 CIPOLLONI & ASSOCIATES, INC. 21 CERTIFIED SHORTHAND REPORTERS 22 1125 ATLANTIC AVENUE, SUITE 416 23 ATLANTIC CITY, NEW JERSEY 08401 24 (609) 348-9190 25 www.cipolloni-associates.com 2 1 B E F O R E : 2 CASINO CONTROL COMMISSION: LINDA M. KASSEKERT, CHAIR 3 RALPH G. FRULIO, VICE CHAIR MICHAEL C. EPPS, COMMISSIONER 4 MICHAEL A. FEDORKO, COMMISSIONER WILLIAM T. SOMMELING, COMMISSIONER 5 PRESENT FOR THE CASINO CONTROL COMMISSION: 6 DARYL W. NANCE, ADMINISTRATIVE ANALYST DANIEL J. HENEGHAN, PUBLIC INFORMATION OFFICER 7 OFFICE OF THE GENERAL COUNSEL: 8 DIANNA W. FAUNTLEROY, GENERAL COUNSEL/EXECUTIVE SECRETARY 9 LEONARD J. DIGIACOMO, ASSISTANT GENERAL COUNSEL 10 DIVISION OF GAMING ENFORCEMENT: DEPUTY ATTORNEYS GENERAL 11 RAYMOND MARQUEZ, DEPUTY ATTORNEY GENERAL 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 A P P E A R A N C E S : 2 ITEMS 1-3 3 LEONARD J. DiGIACOMO, ASSISTANT GENERAL COUNSEL RAYMOND MARQUEZ, DEPUTY ATTORNEY GENERAL 4 GILBERT BROOKS, ESQ. PATRICIA WILD, ESQ. 5 FOR: RIH ACQUISITIONS, NJ, LLC And RIH INTERNATIONAL HOLDINGS, LLC 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 1 AGENDA PUBLIC MEETING NO. 06-10-23 2 OCTOBER 23, 2006, 9:43 a.m. ITEM VOTE 3 1 Amended Petition of RIH Acquisitions, NJ, 31 4 LLC, for approval of a material debt transaction and for other relief 5 2 Second amended petition of RIH 29 6 Acquisition, NJ, LLC, to approve the issuance of certain promissory notes 7 and warrants and for other relief 8 3 Consideration of the qualification of 28 Lance J. Millage to serve as Senior Vice 9 President, Corporate Controller of RIH Resorts, LLC 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5 1 I N D E X 2 WITNESS: DIRECT CROSS 3 ERIC MATEGJEVCH By Mr. Brooks 17 4 By Mr. Marquez 21 5 6 7 E X H I B I T S : 8 9 ITEM NO. 1-3 DESCRIPTION 10 1 Loan Agreement with JP Morgan Chase Bank, NA 11 2 Mortgage and Security Agreement 3 Deed of Trust, Assignment of Leases and Rents 12 and Security Agreement 4 Unanimous Written Consent of the Board of 13 RIH Acquisitions, New Jersey, LLC 5 Unanimous Written Consent of the Board of 14 RIH Propco New Jersey, LLC 6 Second Amended and Restated Limited 15 Liability Company Agreement of RIH Acquisitors, New Jersey, LLC 16 7 Limited Liability Company of RIH Propco New Jersey, LLC 17 8 Unitary Lease Agreement 9 Pledge and Security Agreement 18 10 Environmental Indemnity Agreement 11 Guaranty of Recourse Obligations of Borrower 19 12 Promissory Note 13 Ground Lease by and between RIH 20 Acquisitions New Jersey, LLC, and RIH Propco New Jersey, LLC 21 14 Memorandum of Ground Lease 15 Assignment of Leases and Rents 22 23 24 25 (Exhibits retained by Commission.) 6 1 (Public Meeting No. 06-10-23 was 2 commenced at 9:43 a.m.) 3 MR. NANCE: Good morning. I'd like to 4 read an opening statement: This is to advise 5 the general public that in compliance with 6 Chapter 231 of the Public Laws of 1975 entitled 7 the "Open" Public Meetings Act," the New Jersey 8 Casino Control Commission on October 18, 2006, 9 filed with the Secretary of State at the State 10 House, Trenton, New Jersey, a notice of this 11 hearing. On October 18th, 2006, copies were 12 mailed to subscribers. 13 Members of the press will be permitted 14 to take photographs. We will ask this be done 15 in a manner which is not disruptive or 16 distractive to the Commission and which does 17 the interfere with the public's right to 18 observe the hearing. 19 The use of cell phones in the public 20 meeting room while the Commission is in session 21 is prohibited. 22 Would everyone please stand for the 23 Pledge of Allegiance. 24 (The flag salute was recited.) 25 7 ITEMS 1-3 1 MR. DiGIACOMO: Madame Chair, 2 Commissioners, good morning. 3 There are three matters before the 4 Commission -- 5 CHAIR KASSEKERT: I think Daryl has -- 6 Daryl, do you have to do roll call 7 first? 8 MR. NANCE: Yes. 9 CHAIR KASSEKERT: Okay. 10 MR. NANCE: Vice Chair Frulio? 11 VICE CHAIR FRULIO: Here. 12 MR. NANCE: Commissioner Fedorko? 13 COMMISSIONER FEDORKO: Here, 14 MR. NANCE: Commissioner Epps? 15 VICE CHAIR EPPS: Here. 16 MR. NANCE: Commissioner Sommeling? 17 COMMISSIONER SOMMELING: Here. 18 MR. NANCE: Chair Kassekert? 19 CHAIR KASSEKERT: Here. 20 MR. NANCE: The record will reflect that 21 all Commissioners are present. 22 CHAIR KASSEKERT: Len, go ahead. 23 MR. DiGIACOMO: Thank you, Madame Chair. 24 It may be that I was jumping the gun in 25 another respect. I suppose Mr. Nance should 8 ITEMS 1-3 1 then announce what the items on the agenda are 2 for today. 3 CHAIR KASSEKERT: Yes, he should. 4 MR. NANCE: Okay. The matters before 5 the Commissioners are, No. 1, the amended 6 petition of RIH Acquisitions, New Jersey, LLC, 7 for approval of material debt transaction and 8 for other relief. 9 Item 2 is the second amended petition of 10 RIH Acquisitions, New Jersey, LLC, to approve 11 the issuance of certain promissory notes and 12 warrants and for other relief. 13 And Item 3 is consideration of the 14 qualification for Lance J. Millage to serve as 15 Senior Vice President, Corporate Controller, of 16 RIH Resorts, LLC. 17 CHAIR KASSEKERT: Thank you. 18 MR. DiGIACOMO: Madame Chair, on those 19 matters, which all in one way or the other have 20 an impact on the Atlantic City Hilton, Miss 21 Patricia Wild is here. Mr. Gilbert Brooks for 22 the Petitioners, and Mr. Raymond Marquez for 23 the Division of Gaming Enforcement. 24 I've shared with counsel for the parties 25 drafts of the three resolutions on each of 9 ITEMS 1-3 1 those matters. And, ultimately, I believe, 2 with the modifications I've discussed with 3 counsel, they are prepared to consent to the 4 form and entry of each of those resolutions. 5 Although there are three items on the 6 agenda today, it may be in the -- expedient for 7 the Commission to hear argument in the order 8 that they're listed, but at the time that the 9 vote is taken, to vote in the reverse order. 10 In other words, to do Mr. Millage first. He's 11 No. 3 on the agenda. The -- what I'll refer to 12 as the no-warrant petition as the second vote, 13 and then the third vote, each of which will 14 require -- 15 CHAIR KASSEKERT: Roll call. 16 MR. DiGIACOMO: -- a roll call. 17 The third vote would be on the material 18 debt petition, which is Item No. 1. 19 CHAIR KASSEKERT: Very good. 20 MR. DiGIACOMO: I believe as to that 21 matter, Mr. Brooks is making a request, 22 ultimately, to seal what I think will be the 23 Division's report admitted into evidence in 24 that matter. 25 MR. BROOKS: At the risk of -- good 10 ITEMS 1-3 1 morning, Madame Chair. 2 CHAIR KASSEKERT: Good morning. 3 MR. BROOKS: First of all, let me say on 4 behalf of the company, thank you to the 5 Commission for taking the time to have this 6 hearing in connection with the application, and 7 it's a very significant event for the company. 8 And we appreciate your indulgence in that 9 regard. 10 And I'd also like to thank the Division 11 of Gaming Enforcement and the Commission staff 12 for their supportive efforts to get us here 13 today. They've done a lot of work to help us 14 and support this important event for the 15 company. 16 In terms of the Division of Gaming 17 Enforcement's report, there is one portion that 18 we ask to seal. I've given that to staff. 19 It's forecast related to 2007 and the last 20 quarter of 2006. 21 CHAIR KASSEKERT: Okay. Why don't we 22 have Mr. Nance read the exhibits in so we get 23 those in. And then I'll -- then I'll take the 24 sealing request under consideration. 25 Is that the correct way to go? 11 ITEMS 1-3 1 MR. DiGIACOMO: That's fine, Madame 2 Chair. 3 CHAIR KASSEKERT: Okay. Mr. Nance, if 4 you could read in the exhibit list? 5 MR. NANCE: The Division has one 6 exhibit, report dated October 17, 2006, 7 regarding Petition 2720606 by Raymond Marquez. 8 The -- which will be marked as D-1. 9 The Petitioners have 15 premarked 10 exhibits. They'll be entered as P-1 through 11 P-15. 12 CHAIR KASSEKERT: I have 16. 13 MR. NANCE: Sixteen is not being 14 considered. 15 MR. BROOKS: Madame Chair, yes. Sixteen 16 was -- 17 CHAIR KASSEKERT: Okay. 18 MR. BROOKS: -- initially a document we 19 were involved with, but there is -- it will not 20 in be used in connection with this action. 21 CHAIR KASSEKERT: Okay. 22 MR. BROOKS: So there will be 15 23 exhibits. 24 CHAIR KASSEKERT: Very good. Thank you 25 very much. 12 ITEMS 1-3 1 Let me ask. I know Petitioners would 2 like to see some of the information redacted. 3 Let me ask the Division if they agree to that? 4 MR. MARQUEZ: Absolutely no problem, 5 Madame Chair. 6 CHAIR KASSEKERT: Very good. I will 7 move those exhibits into consideration and 8 along with the redactions. 9 And now you may continue, Mr. Brooks and 10 Miss Wild. 11 MR. BROOKS: Thank you, Madame Chair. 12 I'll first address the amended petition. 13 The amended petition in connection with the 14 material debt transaction approvals that we are 15 seeking here today. There are a couple changes 16 from the petition. I've discussed them with 17 counsel for the Division and Commission staff. 18 I just want to briefly highlight those changes. 19 The first change is we button-down the 20 amount of the credit facility. We are seeking 21 permission -- material debt transaction 22 approval will be for a loan commitment for $1 23 billion. Now, it will consist of a $960 24 million single-draw term loan, and we're asking 25 also for permission of up to a subsequent $40 13 ITEMS 1-3 1 million revolving line of credit. 2 At this point what's in place is the 3 $960 million single-draw term loan, but it's 4 anticipated that the company shortly thereafter 5 will also make arrangements for a revolving 6 line of credit of some amount not to exceed $40 7 million. So that's just to confirm the amount 8 in connection with the requested relief today. 9 The second item that has to do with the 10 foot -- the individuals who will make up the 11 management board of both RIH Acquisitions, New 12 Jersey, LLC, and RIH Propco, New Jersey, LLC. 13 And today RIH Acquisition, New Jersey, LLC, has 14 a management board that consists of Tom 15 Barrack, Nicholas Ribis, and the former Justice 16 Clifford. 17 As a result of this financing, we're 18 going to add one more independent director to 19 that board, if the Commission approves it, and 20 that individual will be Bart Oates. Mr. 21 Oates -- he might be familiar to you when we 22 had the plenary approval a couple months ago, 23 subsequent to that we got approval for and 24 statement of compliance in connection with Mr. 25 Oates because there was some idea of adding him 14 ITEMS 1-3 1 to one of the boards at that point in time, so 2 he's been previously reviewed by the Division 3 of Gaming Enforcement and Division staff. 4 Propco, or RIH Propco, New Jersey, LLC, 5 which is the wholly-owned subsidiary of 6 Acquisitions and will be the owner of the new 7 ground underneath the AC Hilton, if this 8 transaction is approved, will have the same 9 exact managing board, and that will be Mr. 10 Barrack, Mr. Ribis, Justice Clifford, and Mr. 11 Oates, if he's approved by the Board. 12 So there -- that will be the managing 13 board. And that's another modification to the 14 amended petition that we have filed with the 15 Commission. 16 And, lastly, we're seeking a request for 17 two transfers above and beyond what we're 18 seeking today. It's really one transfer, but 19 it's going to involve two steps. As the 20 Commission may be aware, RIH Acquisitions, New 21 Jersey, LLC, has a subsidiary, a wholly-owned 22 subsidiary, known as RIH New Jersey Holdings, 23 LLC. That subsidiary was formed for the 24 purposes of holding a gas station and a lot 25 that were acquired as part of the Hilton 15 ITEMS 1-3 1 transaction. And that's all it does. It holds 2 those items. And the -- as part of this 3 financing, the lenders have requested that RIH 4 Acquisitions divest its interest in that 5 limited liability company. 6 So RIH Acquisitions, New Jersey, is 7 going to transfer its membership interest in 8 that up to our -- Resorts International 9 Holdings, LLC, which is its parent. And in 10 turn, Resorts International Holdings, LLC, is 11 going to transfer its ownership certificate to 12 RIH Casino Resorts, LLC. 13 So, essentially, when you look at the 14 ownership chart, holdings will go from one 15 level up a couple levels, but the added credit 16 facility. They'll still be owned in the chain 17 of ownership, but it won't be at the level of 18 entities that are involved. And we're seeking 19 to make those two transfers. Because, of 20 course, they are securities that are being 21 transferred by the licensee. 22 So we have those amendments to the -- or 23 we have those changes to the amended petition 24 in terms of relief we're seeking here today. 25 That's all I have at this point. We are 16 ITEMS 1-3 1 prepared to bring up Mr. Matejevich to provide 2 some testimony. 3 CHAIR KASSEKERT: Sure. Let me just ask 4 if Mr. Marquez wants to say anything in part of 5 an opening. 6 I think that was an opening; right? 7 MR. BROOKS: Something along those 8 lines. 9 MR. MARQUEZ: No. I'll save it for the 10 end. 11 Thank you. 12 CHAIR KASSEKERT: Very good. All right. 13 Mr. Brooks, you could call your witness. 14 MR. BROOKS: Thank you, Madame Chair. 15 I call Eric Matejevich. 16 17 ERIC MATEJEVICH, having been duly sworn 18 to tell the truth, testified as follows: 19 20 MR. NANCE: Please state your name for 21 the record, please, and spell it. 22 THE WITNESS: The first name with a "c." 23 And last name is Matejevich. 24 M-a-t-e-j-e-v-i-c-h. 25 MR. NANCE: Thank you. 17 ERIC MATEJEVICH 1 CHAIR KASSEKERT: You may proceed. 2 MR. BROOKS: Thank you Madame Chair. 3 4 EXAMINATION BY MR. BROOKS: 5 Q. Mr. Matejevich, I know you've been here 6 a couple times testifying, but would you again -- 7 A. Finally I'm here in a positive light. 8 Yes. 9 Q. Just again advise the Commission of your 10 position with the company. 11 A. I am the chief financial officer of 12 Resorts International Holdings. 13 Q. Mr. Matejevich, as you recall, we were 14 here not that long ago in terms of plenary approval of 15 Acquisition, New Jersey, LLC, how has the Atlantic 16 City Hilton been doing since? 17 A. Thankfully, given the direction of Mr. 18 Tony Rody, who happens to be here today, we've made 19 significant improvements in EBDA this year is up 20 probably close to 80 percent over the prior year. So 21 we're very happy. And, in fact, that's afforded us, 22 in large part, to be able to afford us to do this 23 financing that we're asking for today. 24 Q. Would you explain how this financing 25 will work? Would you explain the financing to the 18 ERIC MATEJEVICH 1 Commission. 2 A. Yeah. Absolutely. And this isn't 3 necessary traditional financing for gaming. It will 4 become a very traditional vehicle for financing, I 5 think, in the future for the industry. 6 It is a CMBS financing, a collateralized 7 mortgage back security financing. And it's been used 8 in real estate financings for several years. It's 9 actually multi-billion dollar probably close to a 10 trillion dollars of issuance in any given year. And 11 what it consists of is, really -- like I said, it's 12 done mainly for traditional in office buildings, 13 retail complexes. And it's really for those assets 14 that have real real estate value. We were actually 15 the first in Las Vegas to do a CMBS financing in the 16 industry for our Las Vegas Hilton property. And I 17 actually have since refinanced that. The original was 18 LIBOR plus 650. This just goes to show you that the 19 comfort level that the folks that buy this paper have 20 gotten. Originally the Las Vegas Hilton was priced at 21 LIBOR plus 650. The new transaction I just did this 22 past summer, the LIBOR was priced at plus 250. And 23 yet I was able to up the amount of financing. 24 In our case here, we're going to go from 25 all in interest rate right now a weighted average 19 ERIC MATEJEVICH 1 debt, cost of debt, of about 11 and a half percent, 2 which is our current cost of debt to about eight 3 percent. So we're going to save about three and a 4 half percent on $950 million, which is, you know, 5 approximately over $30 million a year in annual 6 interest savings. 7 Q. Now, the loan itself, it's going to work 8 in two stages; is that correct? There's a loan, 9 initial loan with JP Morgan? 10 A. Oh, yeah. There's a initial loan. The 11 initial lender will be JP Morgan. And then what 12 they'll do is move the loan itself into something 13 that's called a REMIC trust. And if you ask me for 14 that acronym right now, I'd probably have a hard time 15 coming up with exactly what "REMIC" means. But, 16 essentially, what you do is move the real estate into 17 this trust, and then you sell off portions of that 18 trust. You trounch off sections of that trust. 19 Typically the way a REMIC works is that 20 you'll take four or five separate real estate loans, 21 which is what this essentially is to begin with. And 22 then you trounch it and sell off the senior portions 23 to someone who needs a fairly low return. And down to 24 the riskiest portions of the REMIC, which would go to 25 your subordinate note buyers. And these are in the 20 ERIC MATEJEVICH 1 forms of bonds. Then the folks that buy 2 participations in this trust. 3 Q. And this -- when this transaction 4 occurs, it will have a -- what will be the ultimate 5 benefits to the Atlantic City Hilton in terms of this 6 financing as opposed to the current financing? 7 A. There are really a number of benefits. 8 I mentioned already the annual interest savings, which 9 again is over $30 million. But moreover, for us, 10 there are no real finance covenants. So long as 11 you're making your debt service payments, it's not 12 like you have debt service coverage ratios to maintain 13 or leverage ratios to maintain. So, you know, there's 14 safety in that. 15 It also has a fairly minimal lock-out 16 period. As I'm sure you're familiar with high-yield 17 bonds, you typically have a lock-out period where you 18 can't call them for a period of time. And then it's 19 got a very high call price. In that case, our 20 lock-out period will be about 16 months, after which 21 we can call this debt at par, if we so choose, to go 22 in a different direction. 23 MR. BROOKS: Madame Chair, I have no 24 nothing further. 25 CHAIR KASSEKERT: Thank you. 21 ERIC MATEJEVICH 1 Mr. Marquez? 2 3 EXAMINATION BY MR. MARQUEZ: 4 Q. What would be the timing of doing this 5 security? 6 A. JP Morgan hasn't really been clear with 7 us on the specific timing, and so I would say it's up 8 to the lender. 9 Q. But generally, like with the Las Vegas 10 Hilton, what's your experience? 11 A. Actually, the Las Vegas Hilton has never 12 been securitized. The lender there, which is Goldman 13 Sachs, has just kept that on their books. 14 Q. So, then, it may never be secured? 15 A. There's a chance that it doesn't get 16 securitized. That's true. 17 Q. When you say there's 30 million savings 18 in interest, some of that is PIK interest. That's 19 correct? 20 A. That's correct. Some of that. 21 Q. How much that would be PIK interest? 22 A. I don't know off the top of my head. I 23 think if you actually included a computer run rate of 24 what our current interest rates are, and you know -- 25 part the reasoning for trying to get this done fairly 22 ERIC MATEJEVICH 1 quickly is on Thursday of this week I actually incur 2 under my current second lien, which is currently 16 3 and a half percent, the interest rate on that PIK goes 4 up to 17 and a quarter. Plus I incur -- my call 5 premium goes up a point. And I owe them a one-point 6 fee. So it would be about a $6 million fee, not to 7 mention a higher interest rate on Thursday. 8 So if you took all the PIK interest at 9 the current run rate, we'd probably the interest 10 savings is closer to $40 million a year. 11 Q. Okay. Do you have to do a land 12 transaction as part of this land sale? 13 A. It doesn't have to be done. We plan on 14 closing that land later this week, just as a timing 15 issue that the two are very close. And that will then 16 allow for the repayment of the calling and hold call 17 in note that's in place. 18 Q. Okay. And that -- 19 A. The land sale is basically the eight and 20 a half acres, which are south of the Atlantic City 21 Hilton. 22 Q. What do you expect to make as a net on 23 that land sale? 24 A. About 74.7 million after paying all 25 taxes. 23 ERIC MATEJEVICH 1 Q. Okay. I have nothing further. 2 MR. MARQUEZ: Thank you. 3 CHAIR KASSEKERT: Thank you. Let me ask 4 if any of the Commissioners have any questions? 5 COMMISSIONER FEDORKO: I just have one 6 question, Mr. Matejevich. 7 What -- is that land now? Is that a 8 parking lot? I'm trying to -- 9 THE WITNESS: It's the former Atlantic 10 City High School site. 11 COMMISSIONER FEDORKO: Oh, the high 12 school site. 13 THE WITNESS: And as well as one paved 14 parking lot, and the other lot is unimproved. 15 COMMISSIONER FEDORKO: Oh, okay. 16 CHAIR KASSEKERT: Okay. 17 Commission Epps? 18 COMMISSIONER EPPS: And I have a couple 19 of questions. 20 First of all, the last time we were 21 here, one of our concerns were financial ratios 22 and covenants and things of that nature and 23 hitting those marks. Does this transaction 24 take that out of the equation? 25 THE WITNESS: It does. 24 ERIC MATEJEVICH 1 VICE CHAIR EPPS: Okay. So it puts it 2 in a better situation. 3 THE WITNESS: Much better. 4 COMMISSIONER EPPS: Not worrying about 5 paper default and things of that nature? 6 THE WITNESS: Exactly. 7 COMMISSIONER EPPS: That gives you 8 better lines, but aren't are really -- 9 THE WITNESS: Exactly. 10 COMMISSIONER EPPS: Thank you. That 11 gives me a great level of comfort. 12 Secondly, the land sale, it's not -- if 13 I understand correctly -- is not a part of the 14 transaction. So you don't have to complete 15 that in order to complete this transaction. 16 THE WITNESS: That's correct. In fact, 17 it should close after the loan. 18 VICE CHAIR EPPS: Okay. Those are 19 all -- 20 CHAIR KASSEKERT: Okay. Any other 21 questions? 22 COMMISSIONER SOMMELING: No questions, 23 Madame Chair. 24 CHAIR KASSEKERT: Okay. 25 Any redirect? Recross? 25 ITEMS 1-3 1 MR. BROOKS: Nothing further, Madame 2 Chair. 3 MR. MARQUEZ: No. 4 CHAIR KASSEKERT: Okay. You may step 5 down. 6 Okay. Let me -- I think we're going to 7 take a brief recess at this point. I will -- 8 MR. DiGIACOMO: Well, Madame Chair, I'm 9 not sure if counsel will address themselves to 10 the other two matters as well. 11 CHAIR KASSEKERT: Okay. That's fine. 12 So do you want to start with -- 13 MR. DiGIACOMO: Well, we're on this 14 item. I believe -- excuse me -- Mr. Marquez 15 formally on the record is hearing for the first 16 time the amendments that Mr. Brooks alluded to, 17 and probably to supplement the Division's 18 report, should address those two matters 19 involving RIH, NJ, Holdings and mention Mr. 20 Oates. 21 CHAIR KASSEKERT: Mr. Oates. Very good. 22 MR. MARQUEZ: Well, we've previously 23 sent in an approval report on Mr. Bart Oates 24 and issued a statement of compliance. We have 25 no problem with that. 26 ITEMS 1-3 1 CHAIR KASSEKERT: Okay. 2 MR. MARQUEZ: The RIH Holding, LLC, will 3 still remain a subsidiary company held by a 4 holding company that's already approved, so 5 there's really not a change in status, only 6 location. So that's not a problem for us in 7 any way. 8 One of the other things that I think I 9 should mention is in the resolution as drafted, 10 it talks about each of the non New Jersey 11 property companies being considered a financial 12 source. And whether or not they should be 13 found qualified at this point or some later 14 point. I think they should be found qualified 15 at this point because we know their ownership 16 and control and basically we know more about 17 these than most we give blessing to, so I have 18 no problem with doing that at this point in 19 time. 20 That's all I have. 21 CHAIR KASSEKERT: Very good. All right. 22 MR. BROOKS: Madame Chair, in connection 23 with the other two applications before the 24 Commission today, the application to approve 25 transfers of notes and warrants, we have a 27 ITEMS 1-3 1 resolution. We've had a chance to review the 2 resolution. I really have nothing further in 3 connection with that. I would ask for approval 4 in accordance with that resolution. 5 And we have a third application here 6 today. I think we have seen a resolution in 7 connection with that. And that's the -- yes. 8 We're seeking reapproval of the qualification 9 of Lance Millage, who is going to be an officer 10 at the RIH, LLC, level. 11 And, again, we've had a resolution that 12 we've had a chance to review, and we are 13 satisfied with the resolution that's prepared 14 and accept said same. So I just ask for 15 approvals in the resolutions. 16 CHAIR KASSEKERT: Thank you. 17 MR. MARQUEZ: And we should concur. 18 CHAIR KASSEKERT: Should we take the 19 votes on those two items and then recess? 20 MR. DiGIACOMO: We can, Madame Chair. 21 Absolutely. 22 CHAIR KASSEKERT: All right. Why don't 23 we take Item 3, first, Mr. Nance. 24 MR. NANCE: Item 3, consideration of the 25 qualification of Lance J. Millage to serve as 28 ITEMS 1-3 1 Senior Vice President, Corporate Controller of 2 RIH Resorts, LLC. 3 CHAIR KASSEKERT: Okay. Is there a 4 motion? 5 COMMISSIONER SOMMELING: Motion to 6 approve -- 7 VICE CHAIR FRULIO: Move to adopt the 8 draft resolution and qualify Lance J. Millage 9 to serve as Senior Vice President and Corporate 10 Controller or RIH Resorts, LLC. 11 COMMISSIONER FEDORKO: Second. 12 CHAIR KASSEKERT: The motion is made and 13 seconded. This a roll call vote. 14 MR. NANCE: Commissioner Sommeling? 15 COMMISSIONER SOMMELING: Yes. 16 MR. NANCE: Commissioner Epps? 17 COMMISSIONER EPPS: Yes. 18 MR. NANCE: Commissioner Fedorko? 19 COMMISSIONER FEDORKO: Yes. 20 MR. NANCE: Vice Chair Frulio? 21 VICE CHAIR FRULIO: Yes. 22 MR. NANCE: Chair Kassekert? 23 CHAIR KASSEKERT: Yes. 24 MR. NANCE: The record will reflect that 25 the motion is unanimous. 29 ITEMS 1-3 1 CHAIR KASSEKERT: We'll move to Item 2. 2 MR. NANCE: Item No. 2, second amended 3 petition of RIH Acquisition, New Jersey, LLC, 4 to approve the issuance of certain promissory 5 notes and warrants and for other relief. 6 CHAIR KASSEKERT: Is there a motion? 7 COMMISSIONER FEDORKO: Motion to adopt 8 the draft resolution and grant the relief 9 requested in the second amended petition to the 10 extent set forth and subject to the conditions 11 in the resolution. 12 VICE CHAIR FRULIO: Second. 13 CHAIR KASSEKERT: Yeah. For the 14 promissory notes. 15 Motion is made and seconded. This is a 16 roll call vote. 17 MR. NANCE: Commissioner Sommeling? 18 COMMISSIONER SOMMELING: Yes. 19 MR. NANCE: Commissioner Epps? 20 COMMISSIONER EPPS: Yes. 21 MR. NANCE: Commissioner Fedorko? 22 COMMISSIONER FEDORKO: Yes. 23 MR. NANCE: Vice Chair Frulio? 24 VICE CHAIR FRULIO: Yes. 25 MR. NANCE: Chair Kassekert? 30 ITEMS 1-3 1 CHAIR KASSEKERT: Yes. 2 MR. NANCE: The record will reflect that 3 the motion is unanimous. 4 CHAIR KASSEKERT: Thank you. 5 We will take a brief recess at this 6 point. 7 MR. DiGIACOMO: And I would note for the 8 record, Madame Chair, on the draft resolution 9 for Item No. 1, it already provides for the 10 granting of the sealing request. 11 CHAIR KASSEKERT: Very good. 12 MR. DiGIACOMO: So the motion itself at 13 that time -- 14 CHAIR KASSEKERT: Doesn't require a 15 separate -- 16 MR. DiGIACOMO: Yes. 17 CHAIR KASSEKERT: Okay. 18 (A recess was taken from 10:04 to 10:21 19 a.m.) 20 CHAIR KASSEKERT: Thank you. We'll go 21 back on the record now. 22 Let me ask before I entertain a motion 23 if there are any other issues that need to be 24 brought to our attention at this time? 25 MR. MARQUEZ: Nothing from the Division, 31 ITEMS 1-3 1 Madame Chair. 2 MR. BROOKS: Nothing on our part. 3 CHAIR KASSEKERT: Very good. Okay. 4 I'll entertain a motion. 5 COMMISSIONER FEDORKO: Motion to adopt 6 the draft resolution and grant the relief 7 requested in the amended petition to the extent 8 set forth and subject to the conditions of the 9 resolution. 10 COMMISSIONER SOMMELING: Second. 11 VICE CHAIR FRULIO: Second. 12 CHAIR KASSEKERT: Motion is made and 13 seconded. This is a roll call vote. 14 MR. NANCE: Commissioner Sommeling? 15 COMMISSIONER SOMMELING: Yes. 16 MR. NANCE: Commissioner Epps? 17 COMMISSIONER EPPS: Yes. 18 MR. NANCE: Commissioner Fedorko? 19 COMMISSIONER FEDORKO: Yes. 20 MR. NANCE: Vice Chair Frulio? 21 VICE CHAIR FRULIO: Yes. 22 MR. NANCE: Chair Kassekert? 23 CHAIR KASSEKERT: Yes. 24 MR. NANCE: The record will reflect that 25 the motion is unanimous. 32 1 CHAIR KASSEKERT: Thank you. 2 MR. MARQUEZ: Thank you. 3 CHAIR KASSEKERT: Now I'll entertain a 4 motion to adjourn. I guess we don't need a 5 public portion. 6 COMMISSIONER SOMMELING: Motion to 7 adjourn. 8 COMMISSIONER FEDORKO: Second. 9 CHAIR KASSEKERT: The motion has been 10 made and seconded. All those in favor? 11 (Ayes.) 12 CHAIR KASSEKERT: Opposed? 13 (No response.) 14 CHAIR KASSEKERT: The motion carries. 15 Thank you. 16 (Public Meeting 06-10-23 was adjourned 17 at 10:22 a.m.) 18 19 20 21 22 23 24 25 33 1 2 C E R T I F I C A T E 3 4 5 I, DARLENE SILLITOE, a Certified 6 Shorthand Reporter and Notary Public of the 7 State of New Jersey, certify that the foregoing 8 is a true and accurate transcript of the 9 proceedings. 10 11 12 I further certify that I am neither 13 attorney, of counsel for, nor related to or 14 employed by any of the parties to the action; 15 further that I am not a relative or employee of 16 any attorney or counsel employed in this case; 17 nor am I financially interested in the action. 18 19 20 DARLENE SILLITOE CSR 21 License No XI01023 22 23 Dated: October 23, 2006 24 My Commission Expires on July 10, 2009 25 ID No 2062871