Penn National Bids on Greektown Casino

From Freep (H/T Pechanga):

Penn National Gaming, Inc., a well-capitalized casino owner, has submitted a bid to purchase Greektown Casino in downtown Detroit.

Timothy J. Wilmott, president and chief operating officer of the Pennslyvania-based company, said Penn National likes the Detroit market. The company also has looked at buying assets from MGM Mirage, including the company’s MGM Grand Detroit property.

Penn National is the second bidder to confirm its interest in buying the casino that filed Chapter 11 bankruptcy about a year ago. Bloomfield Hills businessman Tom Celani also has bid on Greektown.

Greektown is actively marketing the property through the bankruptcy process. By June 1, the casino’s estate must choose one of two paths — reorganization under its current owner, the Sault Tribe of Chippewa Indians, or a sale to a new owner.

Wilmott said Penn National received a $1.4-billion settlement in mid-2008 from a failed merger agreement settlement.

“We find ourselves … with a great growth opportunity to pursue distressed assets,” Wilmott said during the Canadian Gaming Summit at Caesars Windsor today.

Wilmott said Penn National would not try to buy both MGM and Greektown. MGM Grand Detroit was offered as collateral in a new financing deal for MGM Mirage Wednesday, but the property could still be sold with bank approval.

Gaming equity analyst Joe Fath, a vice president at T. Rowe Price, said Penn National is good at turning around underperforming assets.

“They are a great company, very, very well run and they are flush with cash,” Fath said.

Since filing for bankruptcy in May, Greektown reports it has lost more than $142 million. It owes about $777 million to creditors and lenders.

But Greektown repeatedly has generated more than $300 million in annual gaming revenue.

Penn National owns or manages 19 gaming facilities, both casinos and racetracks with slots, in the United States and Canada — but none in big gambling meccas like Las Vegas.

It also has seven other ractracks and six off-track wagering operations. They employ about 16,000.

Wilmott said Penn National’s bid is contingent on a tax rollback currently being disputed between the city of Detroit and the casino. A hearing is scheduled Friday in bankruptcy court on the rollback which could boost Greektown’s cash flow by $15 million annually. Both MGM Grand Detroit and Motor City casinos have the 5% tax rollback.