By Stephen Dick, Herald Bulletin Associate Editor
ANDERSON, Ind. — Hoosier Park parent Centaur filed for Chapter 11 bankruptcy Saturday night for “a new beginning,” according to Centaur CEO Rod Ratcliff. In the meantime, however, Jim Brown, general manager of gaming at Hoosier Park, said no part of the racino will be affected by the filing.
The filing deals strictly with Centaur’s capital structure, according to Kurt Wilson, Centaur’s chief of financial operations. “The businesses are healthy.” Centaur owns casinos in Indiana, Colorado and Pennsylvania.
The filing was done in U.S. Bankruptcy Court in Wilmington, Del. Next, Centaur will submit a reorganization plan to pay the company’s creditors. Details of the plan weren’t forthcoming Sunday, but the plan will be available “very soon,” said Wilson.
“This necessary step will provide us with the financial flexibility to strongly position the company for future success,” said Ratcliff. The company hopes to exit bankruptcy by the end of July.
Centaur’s financial plight has been well known recently. Ratcliff said the bankruptcy filing has been in the works for six months with talk among the company and first-lien lenders. Before Hoosier Park’s casino opened in June 2008, Centaur had to pay the state a $250 million licensing fee. Plus, the state imposed a tax rate on the racino in excess of the levy on the riverboats.
When Hoosier Park’s revenue fell below expectations, the stage was set for the bankruptcy filing. In the spring of 2009, Centaur hinted that bankruptcy might be imminent. In June 2009, Gov. Mitch Daniels told The Herald Bulletin there would be no tax help for Hoosier Park.
Wilson said the Indiana Legislature has studied the problem, and local legislators have said that the licensing fee was too steep. State Rep. Scott Reske, D-Pendleton, said the fee should’ve been $150 million. In the current General Assembly session, the matter of tax relief for the racinos (Hoosier Park and Indy Live Casino in Shelbyville) wasn’t on the table. The only gaming activity taken up legislators concerned allowing riverboats to move to inland casinos. That never reached a vote.
Brown and Wilson said they remain optimistic that the legislature will eventually take up the issue of tax parity with the racinos and riverboats.
The Herald Bulletin left messages with several local legislators Sunday.
Meanwhile, Ratcliff mentioned a list of gaming sites that have filed Chapter 11, including Majestic Star in Indiana.
“Unfortunately, we have good company,” said Wilson.
One of the reasons for filing, according to Wilson, is to rework the capital structure for the launch of Centaur’s Valley View Downs in western Pennsylvania. Wilson said the company is on track to begin racing there in September.
“(With the Chapter 11 filing) we can now clearly set the path to get the job done,” said Wilson of the opening of the new track.
Ratcliff said the Pennsylvania fees are “not as tough” as Indiana.
“There is a reasonable licensing fee and creates the opportunity for table games,” Ratcliff said.
Brown reiterated that Hoosier Park’s 1,000 employees and daily operations will continue to be an economic benefit to Madison County, and nothing will change while the company works to reorganize its capital structure.
“We don’t want people to worry,” said Brown. “We’re going to be here for a long time to come.”
What is Chapter 11 of the U.S. Bankruptcy Code?
Chapter 11 is typically used for business bankruptcies and restructuring. It is not commonly used by individual consumers since it is far more complex and expensive to pursue. It allows businesses to reorganize themselves, giving them an opportunity to restructure debt and get out from under certain burdensome leases and contracts. Typically a business is allowed to continue to operate while it is in Chapter 11, although it does so under the supervision of the Bankruptcy Court and its appointees.
Source: freeadvice.com
