Centaur wins approval to sell Colorado casino

August 27, 2010

Casino and racetrack operator Centaur LLC has been authorized to sell the Fortune Valley Hotel & Casino 40 miles west of Denver.

The buyer, Luna Gaming Central City LLC, is paying $7.5 million in cash plus a $2.5 million note, less adjustments. There were no competing bids.

Centaur filed a revised reorganization plan on July 22 in which holders of $405 million in first-lien debt are slated to recover 83.3 percent from 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, according to the disclosure statement filed along with the plan.

Centaur, which which nearly three years ago was flying high after attracting $1 billion in investments, doesn’t believe that its assets are worth enough to pay first-lien debt in full.

Centaur LLC and 12 affiliates filed Chapter 11 petitions in March. Affiliates Centaur PA Land LP and Valley View Downs LP filed for bankruptcy reorganization in October to keep alive a project to develop a racetrack in Pennsylvania. All the companies are subsidiaries of closely held Centaur Inc., which is not in bankruptcy.

The March filings listed assets of $584 million and debt of $681 million. The newer cases resulted from the failure to make payments due in October on a $382.5 million first-lien debt and a $192 million second-lien credit. The companies have horse racing and gambling facilities in five markets in Indiana and Colorado. They were developing a property in Pennsylvania to be called Valley View Downs and Casino 55 miles from Pittsburg.

The companies own Hoosier Park, an Indiana casino and horse racetrack in Anderson, along with three offtrack betting parlors in Indiana. In addition, they own Fortune Valley Hotel & Casino in Central City, Colo., which has a 118-room hotel to complement the casino. The companies generated revenue of $277.5 million in 2009.

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