Sault Tribe Chair Joe McCoy on the Loss of Greektown Casino

Well, they sent it to me, so I’ll post it:

I write this memo to our tribal and casino team members to inform you that after more than two years in Chapter 11 reorganization, the Michigan Gaming Control Board (MGCB) transferred the license of Greektown Casino from the Tribe to a group of private hedge funds and investors from other states.  This happened yesterday at a special meeting of the MGCB in Detroit.  We anticipate that next week, ownership of the casino will be legally transferred to the group.

The transfer occurred after the MGCB conducted a relatively abbreviated background check of the new owners. We strongly objected to this decision. Concerns were also raised by state Representative Gary McDowell, D-Rudyard, Republican candidate for governor Mike Bouchard (who wrote the state law that governs the three Detroit casinos when he was in the state Senate), state Senate Majority Leader Michael Bishop, R-Troy, and Congressman Bart Stupak, D-Menominee. Unfortunately, the MGCB ignored all the concerns and abandoned its own rules and the process it has used over the years to license casino owners.

The board and I spent many days, weeks, and months reviewing plans and proposals that would allow us to keep a stake in Greektown. Though some might disagree, I truly believe we did all we could to save our interest in this investment.  Now that this decision has been made, it is time for the Tribe to examine other opportunities we have to grow our revenue stream securing membership services for years to come.

Reorganized Greektown Casino Investors Respond to Stupak

From the Freep via Pechanga:

WASHINGTON – A week after U.S. Rep. Bart Stupak asked the federal Interior and Justice departments to put the brakes on the bankruptcy reorganization of Greektown Casino, a lawyer for the investors set to take control from the Sault Ste. Marie Tribe of Chippewa Indians, said Stupak’s claims on behalf of the tribe should not be allowed to slow the process.

Allan Brilliant, a New York lawyer representing a group of private equity and hedge funds which will take ownership of the Detroit casino, said in his letter Tuesday that U.S. Attorney General Eric Holder and Interior Secretary Ken Salazar should “disregard” Stupak’s request to look into the reorganization, saying the tribe’s “last-minute, baseless attempt to delay such exit (from bankruptcy) is detrimental to all parties that benefit from the revenues generated by the facility.”

Last week, Stupak – a Democrat from Menominee on the Upper Peninsula, where the Sault tribe is based – said Holder and Salazar should look into whether land held in trust by the federal government on behalf of a tribe can be handed over to investors without an act of Congress.

He said some of the land on Beaubien Street in Detroit where Greektown Casino is located was given to the federal government on the tribe’s behalf by private investors.

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Greektown Revenues Improving

From the Detroit News via Pechanga:

Detroit — Greektown Casino-Hotel, the city’s smallest casino, reported a 21-percent increase in its November revenue over the same month in 2008.

Greektown took in $28.44 million last month compared to $23.51 million a year earlier.

Overall, gaming revenues were up just slightly in November, 0.6 percent, compared to the same month last year, according to numbers released by the Michigan Gaming Control Board.

MGM Grand Detroit and MotorCity casinos reported respective year-over-year declines of 7.8 percent and 1.8 percent during the same time period.

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Greektown Reorganization Agreement Reached

Here is the reorganization plan referenced in the article below — Greektown Reorganization Plan

From Fox Business via Pechanga:

Greektown Holdings, L.L.C. announced today that beneficial holders of a majority of the principal amount of its pre-petition bank debt have reached agreement to support the plan of reorganization filed on November 2, 2009 by plan sponsors MFC Global Investment Management, OppenheimerFunds, Inc., Brigade Capital Management and Solus Alternative Asset Management LP. That agreement has been supplemented by a stipulation adopted by the Bankruptcy Court on November 19, 2009 among the Debtors, the plan sponsors, an ad hoc group of certain of the Debtors’ pre-petition bank lenders, the indenture trustee for the holders of the Debtors’ 10.75% Senior Unsecured Notes due 2013, the administrative agent for the Debtors’ pre-petition bank debt and DIP Debt and the official committee for the Debtors’ unsecured creditors.

Under the plan which will be amended pursuant to the stipulation, the pre-petition bank lenders would be paid in cash in full on the effective date of the plan, and the holders of the Debtors’ 10.75% Senior Unsecured Notes due 2013 will receive the equity of the reorganized Debtors, subject to dilution by the rights offering provided for in the plan. The holders of the Senior Unsecured Notes would also have the right to subscribe for approximately 78% of the equity at an aggregate purchase price of $185 million in the rights offering. The four plan sponsors have agreed to purchase any equity in such rights offering that is not subscribed for by the holders of the Senior Unsecured Notes in the rights offering. In addition, Solus Alternative Asset Management LP would make a direct investment in the equity of the reorganized Debtors.

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Greektown Hearings to Begin

From the Freep:

U.S. Bankruptcy Judge Walter Shapero has scheduled four days of hearing time during which the plan’s proponents and objectors are to call more than 20 witnesses and present 539 exhibits to prove their cases, according to a procedural order filed with the court.

At dispute is how Greektown Casino, the smallest by revenue of Detroit’s three casinos, was valued. The higher the value, the more creditors have to share. As it stands now, the pre-petition lenders, led by Merrill Lynch Capital Corp., put the value at $540 million and would own the casino after it emerges from bankruptcy.

Negotiations were ongoing over the weekend to deal with a potential wrinkle after the attorney for one creditor said he might offer a competing plan for reorganization. This plan would ensure bondholders, owed about $185 million, would get something out of the process.

“All of the parties continue to negotiate,” said Chuck Moore, a turnaround expert for the casino’s estate. “At this point, there is no plan other than to move forward with the confirmation hearings.”

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Detroit City Council Rejects Greektown Bankruptcy Deal

From FREEP:

The Detroit City Council voted 6-2 Tuesday to reject a $15.3-million settlement for the city that would have transferred ownership of Greektown Casino to a new company after the casino emerges from bankruptcy.

The vote came after a group of local investors, including former Highland Park Emergency Financial Manager Arthur Blackwell, made its case to the council that the investors deserve some form of payment in the bankruptcy.

“I’ve never heard of a deal where the casino has never lost a dime” being in bankruptcy, said Blackwell, an investor who sold most of his stake in Greektown to casino mogul Don Barden, but retains $5 million in Greektown options. “By voting ‘No’ … we’ve got hope for something.”

But Mayor Dave Bing said he will ask the council to reconsider its vote.

In a statement, Bing decried the vote as “an attempt to force the Greektown bankruptcy court to make payments to a small group of casino investors” that violates U.S. bankruptcy rules.

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Greektown Update — Court Grants Motion to Assume Development Contract with City

Here’s the news article explaining all of this (link to Freep article). And here are the materials:

DCT Order Granting Motion to Assume Executory Contract

Greektown Motion to Assume