Cory Wilson 5/30/2008 9:39 am >>>
An open letter to Sault Tribe Members and Team Members:
Financing Being Finalized to Complete Casino and Protect its Value
Greektown Casino has voluntarily asked a federal court for approval to reorganize its finances and continue normal business operations under the protection of Chapter 11 of the U.S. Bankruptcy Code.
In addition, Greektown is finalizing $150 million in financing necessary to complete construction of the new 400-room hotel and gaming floor expansion. Many Companies Follow Chapter 11 to Improved Financial Health.
After exploring other alternatives, Greektown Casino managers, financial consultants, and the Greektown Casino Management Board concluded that Chapter 11 reorganization -- which has been pursued by many companies across the country -- is the best option for the casino.
Chapter 11 allows the casino to continue to operate normally for all guests, player’s club members, employees, vendors, suppliers and contractors.
It’s important to note that Chapter 11 reorganization is not the same as Chapter 7 bankruptcy. Under Chapter 11, otherwise financially healthy companies implement plans to reorganize their finances and debt. Under Chapter 7, companies close and liquidate their assets. Greektown Casino is nowhere close to Chapter 7. Many well-known companies have followed the Chapter 11 path including Delta Airlines, Macy’s, Dow Corning, Federal Mogul, casino operator Tropicana Entertainment, Trump Hotels & Casino Resorts, and many more.
The Tribe would have preferred to avoid Chapter 11 reorganization, however it became impossible to avoid. As you may know, Greektown Casino is held to different standards than are the other two Detroit casinos. Even though Greektown Casino is profitable, regulators have placed financial performance requirements on Greektown Casino the other two properties do not have to meet. In addition, permanent casino construction began about six months late because of delays during negotiations to buy the land on which Greektown’s parking garage was built.
Reorganization Protects Member Programs and Services.
Reorganization will protect Tribal member programs and services while permanent casino construction is being completed. No more funds for Tribal member programs and services will be used to pay Greektown Casino’s bills.
In addition, it is no longer necessary to sell a portion of Greektown Casino at a reduced value. Obviously once the permanent casino and hotel are complete, the value of Greektown Casino will increase dramatically.
Banks Express Confidence in Greektown’s Future
Greektown Casino’s banks are the best judge of the casino’s financial health. Greektown is working with them to finalize the financing needed to complete construction of the permanent casino and emerge from Chapter 11 reorganization a more vibrant enterprise.
In November, Greektown Casino opened its new attached parking structure, marking the completion of Phase 1 construction work on the new permanent Greektown Casino and hotel. Phase 2 - construction of the casino’s new 400-room hotel and expanded gaming floor - is scheduled to be completed in phases in the coming months . The permanent casino and hotel will include a multi-purpose theater, buffet, three restaurants, and 25,000 square feet of additional gaming space.
Total investment in the permanent Greektown Casino project will be about $500 million. Greektown Casino has been the topic of discussion among Tribal members for years. The coming weeks and months will undoubtedly lead to more questions as we move through the reorganization process. The Sault Tribe Board and Chairperson Payment pledge to do our best to keep you informed of important developments.
Again, the goal of the Chapter 11 reorganization is to produce a stronger Greektown Casino that will be a greater financial asset for future Tribal generations. Reorganization protects Tribal member programs and services, allows Greektown Casino to open the permanent casino and hotel, and will significantly increase the value of the property.
Sincerely, Aaron PaymentChairperson
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