Tribe decides against buying bankrupt casinos
Published: February 5,2013
Tags: acquire, acquisition, bankrupt, bankruptcy, buy, casino, Commercial Real Estate, convention, entertainment, gamble, gambling, gaming, hospitality, hotel, lodging, meeting, nightlife, purchase, restaurant, sale, sell, tourism, tourist, vacation, visitor
VICKSBURG — An Oklahoma Indian tribe is no longer planning to spend $125 million to buy the bankrupt DiamondJacks casinos in Bossier City, La., and Vicksburg from Legends Gaming.
Global Gaming Solutions, a unit of the Chickasaw Nation of Oklahoma, wrote in court papers filed Jan. 25 that the DiamondJacks operations had run further downhill since owner Legends Gaming filed for Chapter 11 bankruptcy reorganization in Shreveport, La., in July.
“To put it bluntly, the debtors’ business today is but a shell of what existed only a few short months ago, is not the business that Global Gaming agreed to purchase, and cannot generate the financial performance necessary to allow Global Gaming to comply with the covenants and requirements of the acquisition financing,” a lawyer for Global wrote.
Legends, based near Chicago, accuses Global of breaking its purchase contract. Even after an earlier bankruptcy, the company owes lenders $298 million, almost all in secured debt.
Global had planned to borrow nearly $100 million, in addition to a cash contribution of $27.5 million. But it says it can’t make the debt payments on that amount of money.
Global cited a report from casino consultant Randall Fine that said the casinos are losing their share of shrinking markets, that the larger Bossier City casino is threatened by the planned 2013 opening of the $197 million Margaritaville Casino Resort there and that the casinos are “extremely outdated” and in “woeful” condition.
Global also wrote in court papers that Legends had misstated its finances to the court.
“Apparently to the debtors, it was fine for them to disclose to the court and creditors false information through a disclosure statement, but a breach of contract for Global Gaming to provide true ‘actual’ information,” a lawyer for Global wrote.
William McEnery owns 92 percent of Legends shares. His Chicago-area gas station group — Gas City — was sold off in bankruptcy court in 2011. McEnery has been forced into personal bankruptcy as well.
“We are disappointed with the actions that Global has taken with respect to its obligations under the purchase agreement,” Legends President Raymond Cook said in a Jan. 31 press release. “In view of those actions, we believe that it is in the best interest of the Company to move forward with an alternative plan of reorganization, with the full support of our creditors.”
Legends did not immediately respond Monday to questions about what alternatives it would pursue. Global spokeswoman Kim Koch said, “The path forward is a matter for the court.”
Cook said the Bossier City and Vicksburg casinos would continue to operate and that employees would not be affected.
Employment at the Vicksburg property has fallen to 342 as of Sept. 30, the third smallest of the four casinos currently operating there. A fifth casino closed and filed for bankruptcy in Vicksburg, traditionally Mississippi’s third-largest casino market.
A Louisiana state report from last year says 685 people worked then at the Bossier City DiamondJacks.
To sign up for Mississippi Business Daily Updates, click here.
Top Posts & Pages
- (UPDATE) Prison won’t interrupt ex-prison chief’s retirement cash flow
- 2014 a good year for filmmaking in Mississippi
- JOSH MABUS — Inbound marketing is fueled by wishful thinking
- MARTIN WILLOUGHBY — Doug Dale’s self-awareness helps lift him to top of his game
- PHIL HARDWICK: When Bill Cooley talks, people listen
- MBJ Business Woman of the Year Top 10
- Ex-prison boss and businessman admit to bribery scheme
- ASA postmortem: industrial recruiting is a constant cycle of death and life
- Meet the MBJ's Businesswoman of the Year — Rosemary Smith, a business hotshot