From Crain’s Detroit Business Report:
Restructuring of Greektown Casino L.L.C. finances will cost $13.5 million in professional fees this year and an estimated $20 million by the time the Detroit casino emerges from Chapter 11 bankruptcy reorganization in 2009, a workout consultant told the Michigan Gaming Control Board Thursday.
The board gave approval to Greektown securing a $51.3 million interim loan to pay past due and current bills owed contractors working on the $330 million casino expansion that includes a 400-room hotel.
The loan, which received preliminary approval Wednesday from U.S. Bankruptcy Court Judge Walter Shapero, is part of a $150 million two-part financing package, the rest of which also needs approval from the court and control board.
Charles Moore, senior managing director of Birmingham-based Conway MacKenzie & Dunleavy, told the board that coupling costs of the bankruptcy filed May 29 with loan interest payments that will run more than $51 million means the casino is projected to lose almost $16 million in 2008, compared with a reported profit of $2 million last year.
For the first four months of 2008, Greektown reported revenue of $115.3 million, down almost $5.6 million or 4.6 percent from the same period in 2007.
Moore also said the casino’s workout plan has two tracks for ending the court-supervised reorganization by Feb. 28. One would be to show that Greektown has sufficient financing to exit from bankruptcy protection; the other option is to offer the business for sale to the highest bidder.
Moore said his firm was hired about six weeks ago to aid in the casino’s restructuring and said Greektown needs the interim loan to complete construction and establish its permanent status, now expected in January.
The board voted 4-1 in approving the $51.3 million loan from a consortium of lenders including Merrill Lynch and Wachovia.
Board member Benjamin Friedman of Pleasant Ridge-based Friedman & Lichterman P.C., who voted against the financing, has questioned whether provisions are being made to protect investments made by the Sault Ste. Marie Tribe of Chippewa Indians from tribal funds. The tribe is majority owner of the Greektown Casino.
Turtle Talk 