Melody c. barnes
Ξ November 26th, 2008 | → 2 Comments | ∇ Uncategorized |
Detroit and the Pittsburgh Casino loan
By Fester:
This is purely an information question for my own curiosity.
The Rivers Casino nee Majestic Star was in trouble earlier this year as the original financing fell through due to a combination of the credit crunch and Don Barden’s company’s shaky finances. The new deal was a private equity buy-out that included several loans, one of which was guaranteed by Detroit’s municipal pension plans. Press release is here: Download News_20080819
the project cost is estimated to be approximately $780 million, with the new ownership guild investing over $200 million of new cash equity into the project. $405 million commitment be provided by a consolidate of lenders for which credit suisse acts as agent. in addition, $150 million will be provided by a syndicate of lenders for which key bank acts as agent. this $150 million will be guaranteed by two detroit pension funds.
Between the combination of a possible GM bankruptcy with the attendant job and revenue destruction, the massive drop-off in consumer discretionary spending (which casino gambling is a component of) and increased counter-party risk, I wonder what the value of that guarantee is? Those loans have to be getting risky right about now… I wonder what the impact is on the construction schedule if the investors/lenders get very nervous?
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