Slot maker posts big loss

Friday, Nov. 12, 1999 | 11:30 a.m.

PALO ALTO, Calif. -- Silicon Gaming Inc., maker of the Odyssey slot platform, posted a $5 million third-quarter loss on revenue of $2 million.

In the 1998 third quarter, Silicon lost $14.7 million on revenue of $5 million.

Silicon's high-tech Odyssey slots offer state-of-the-art graphics, but the high cost of the machines has kept the company from making its sales projections

Silicon also said it has modified the restructuring plan announced last July, though the proposal would still result in substantial dilution to current stockholders.

Under the modified plan, holders of its $47.3 million of debt would receive preferred stock convertible into a 57 percent equity interest, as well as $7.5 million of notes paying 10 percent annually. In return, the creditors would be required to invest $5 million for new senior notes that would pay 10 percent cash and 3 percent pay-in-kind interest per year.

Silicon said the restructuring would allocate 38 percent of the new equity to its current employees as "incentive compensation," while existing shareholders would wind up with 5 percent of the company.

The restructuring proposal is subject to various condition, including the consent of Silicon's creditors.

Silicon stock was quoted at 10 cents a share today, just 1.1 cents above its 52-week low.