Anderson, Ind. — Hoosier Park Racing and Casino’s parent company, Centaur LLC, missed an interest payment to its senior lenders Tuesday, causing the company to default on one of its loans.
The lending situation won’t affect Hoosier Park’s operations or number of employees, however, said Jim Brown, the racino’s general manager of gaming.
“Our customers can expect the same entertainment experience that they have come to expect from us, and there will be no impact on our employees,” Brown said. “It will be business as usual for Hoosier Park, regardless of how we go about restructuring our company.”
Brown said the slot machines will not be tightened and rewards will not be reduced in the casino.
With the missed interest payment, however, two of Indianapolis-based Centaur’s affiliated entities in Pennsylvania, Valley View Downs LP and Centaur PA Land LP, filed voluntary Chapter 11 bankruptcy petitions. Brown said the bankruptcy filings were designed to help Centaur keep its gaming permit in Pennsylvania, with which it plans to build another racino called Valley View Downs & Casino.
“We have the last gaming license in Pennsylvania, and we are deeply committed to building that facility,” Brown said. “This was the best mechanism to preserve it.”
In the meantime, Centaur continues to negotiate with its creditors to restructure its corporate debt. Brown said those negotiations would affect the company’s future actions.
“We have numerous options,” he said. “Chapter 11 for the entire company is a possibility. This is simply an effort to redo a debt structure and make your company healthy and ensure the possibility of long-term success.”
Centaur Chief Financial Officer Kurt Wilson said the company had been negotiating with its lenders since July. The company’s existing facilities, which include Hoosier Park and Fortune Valley Hotel & Casino in Central City, Colo., are healthy but not generating enough money to cover Centaur’s capital structure, Wilson said.
Weakness in the economy and a heavy fee burden — Centaur paid $250 million for its Indiana license — has contributed to the existing facilities not being as profitable as needed, Wilson said, as has a delay in the Pennsylvania project that has held up cash flow from that location.
The Pennsylvania project had been funded at the same time as Hoosier Park’s casino was built, but Centaur was unable to receive its Pennsylvania gaming license before credit markets froze and it was forced to give back the loan, Wilson said.
“It has been stymied and delayed since then,” he said. “Now there’s an opportunity with this credit market thawed, it clears the path to move forward,” he said. “We filed Chapter 11 to protect the status of that license so we can continue uninterrupted. We believe it’s the shortest route.”
Wilson said he believed Centaur could accomplish an agreement with its lenders soon. It is unclear how much the missed interest payment was for, as Wilson said Centaur’s finances are private, but the company does not have any principal payments on its loan until 2012.
Brown said he hoped Centaur’s loan default doesn’t affect whether customers come to Hoosier Park.
“Nothing will change,” he said. “I am optimistic that our customers will understand what this is. Everyone can expect a great time a Hoosier Park and for a long time to come in the future.”
Contact Aleasha Sandley: 640-4805, aleasha.sandley@heraldbulletin.com.
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Centaur defaults on loan
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