IBJNews

Casino operator Centaur aims to exit bankruptcy much leaner

Hoosier Park owner shedding two other assets

Back to TopCommentsE-mailPrintBookmark and Share

Hoosier Park owner Centaur Inc., which nearly three years ago was flying high after attracting $1 billion in investments, is becoming a shell of its former self.

Centaur began having trouble making debt payments on properties last year and declared Chapter 11 bankruptcy in Delaware in March. Its debts total more than $600 million.

Besides Hoosier Park in Anderson, Centaur owns the Fortune Valley Hotel & Casino west of Denver and the troubled Valley View Downs project northeast of Pittsburgh.

Centaur is set to unload Fortune Valley in an Aug. 23 auction. The so-called stalking horse bidder is Luna Gaming Central City LLC, which has offered $10 million, including $7.5 million in cash.

The Indianapolis company also has asked a federal judge to approve bidding procedures to auction ownership of Valley View, a planned racetrack-casino project.

Centaur fact boxCentaur in 2007 received Pennsylvania’s last harness-racing license, which qualified it for a casino license. Project financing fell through the next year, however, and it has been unable to secure the casino license from state regulators since.

“Assuming that [Centaur sells] off the Colorado and Pennsylvania properties, we’re just looking at the Anderson facility with no plans for expansion outside of the state, one would presume,” said Ed Feigenbaum, publisher of Indiana Gaming Insight.

That’s a far cry from the ambitious growth it sought after buying out the majority partner of Hoosier Park, Louisville-based Churchill Downs Inc., in 2007.

Soon thereafter, the General Assembly approved the addition of 2,000 slot machines at each of the state’s two horse tracks, Hoosier Park and Shelbyville’s Indiana Downs. Centaur ramped up debt to pay the state’s $250 million license fee and to expand Hoosier Park.

But after Centaur’s Pennsylvania project stalled and the economy soured, the company found itself overleveraged. In October, it missed a $13.4 million interest payment, leading the company to seek bankruptcy protection.

Centaur declined to comment on the bankruptcy proceedings, citing the “sensitive nature” of negotiations.

But in a written statement, the company said “it is our intent to emerge from the restructuring process with Hoosier Park Racing & Casino and its three off-track-betting sites as the principal assets of the reorganized Centaur.” The OTBs are in Fort Wayne, Merrillville and downtown Indianapolis.

Hoosier Park has performed well since the state granted it permission in 2007 to install slot machines. Last month, it produced $4.6 million in tax revenue for the state, fourth-best among Indiana’s 13 casinos.

Centaur overall lost $217 million on $214 million in revenue last year, according to financial statements included in court documents. Expenses included roughly $103 million in casino operating costs and $80 million in interest payments.

Centaur’s reorganization plan calls for holders of $405 million in first-lien debt to recover 83 percent of what they’re owed through a combination of mostly new stock and debt. Holders of $207 million in second-lien debt are in line for a 1.4-percent recovery.

In some cases, second-lien holders would not receive anything unless the first holders are paid in full, said Indianapolis bankruptcy attorney Jeff Hokanson, who is not involved in the case.

But oftentimes, he said, “The second lien holder says, ‘Look, you’re doing this liquidation in bankruptcy and we’re only going to make it easy on you if you pay some ransom, some blood money.’”

Centaur hopes to emerge from bankruptcy in March 2011. An analysis conducted as part of the bankruptcy case found that selling off all three parts of Centaur likely would raise $234 million to $276 million. The bulk of the value is in Hoosier Park, which likely would fetch $175 million to $215 million.•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.

ADVERTISEMENT