Tuesday, July 01, 2008

Builders stop casino work

Builders stop casino work Builders stop casino work
Barden does not pay $10 million, but cuts big deal with investor
Send the builders over to the white elephant Convention Center. Have them roll in the slots machines there. Open the slots parlor next week. And, have the money that Don Barden does have go to pay down the debt of the failing Convention Center. And, Barden's folks can also run the Visit Pittsburgh outfit too.

If Barden wants to build in the future -- he can do it in due time after the conditions change.


Anonymous said...

Builders stop casino work
Barden does not pay $10 million, but cuts big deal with investor
Tuesday, July 01, 2008
By Mark Belko and Gary Rotstein, Pittsburgh Post-Gazette

Work on the North Shore slots parlor came to a halt yesterday after Don Barden failed to come up with $10 million needed to keep construction going, even as he announced he had secured a $120 million investment in the project from a company headed by a Chicago billionaire and fellow casino owner.

At a late afternoon news conference, Bob Oltmanns, casino spokesman, estimated that the work stoppage would last from a "matter of days" to one to two weeks while Mr. Barden races to complete and close on $780 million in financing, a task that has eluded him for more than two months.

The suspension came even though Mr. Oltmanns said Mr. Barden had reached agreement early yesterday morning with Walton Street Capital Fund 6, a private investment firm headed by Chicago billionaire Neil Bluhm, to provide $120 million in equity for the slots parlor.

Mr. Bluhm also is chairman of the HSP Gaming, which won a state slots license to build the SugarHouse casino in Philadelphia.

The $120 million investment, Mr. Oltmanns said, was the last piece needed in the North Shore casino's financing and replaces a proposed $150 million loan from Apollo Strategic Value Fund LP, part of a private equity firm that was involved in the purchase of Harrah's Entertainment.

They hope to complete the agreement by mid-July, he said. However, at the same time, Mr. Oltmanns said Philadelphia-based Keating Building Corp., the primary contractor, had "requested" that work at the site be suspended until the permanent financing was in place.

The contractor asked for the stoppage after Mr. Barden failed to deliver by yesterday's deadline about $10 million owed for work performed in either April or May by a team of more than 20 companies laboring at the site. The companies continued to pay their workers during that time.

At a meeting June 16, they gave Mr. Barden until the end of June to come up with the money or face a possible work stoppage or slow down. Mr. Oltmanns said Keating and the subcontractors met with Mr. Barden again yesterday and rendered their decision.

Dan Keating III, chairman of Keating Building Corp., could not be reached for comment. Mr. Keating, like Mr. Bluhm, also is one of the investors in the SugarHouse casino project in Philadelphia.

Mr. Oltmanns said the suspension of work should not affect the timetable for the North Shore casino's completion, scheduled for May 2009.

In addition to finalizing the $120 million investment from Walton Street, Mr. Barden also will be working to close on more than $600 million in funding arranged through international lender Credit Suisse during the same time frame.

The heavy borrowing by Mr. Barden had been a concern of Wall Street credit rating agencies and forced the Detroit businessman to put his Fitzgerald's casino in Las Vegas up for sale to raise $35 million to invest in his North Shore slots parlor.

Walton's investment and the rest of the proposed financing still will have to be reviewed and approved by the state gaming control board.

The board's next regular meeting is July 10, and it is uncertain what extent Mr. Barden's financing will be part of that agenda. The casino owner obtained postponement from the board last month in giving a detailed review of his financing plans.

However, the work stoppage unsettled some local and state politicians, who are counting on the casino to deliver budget and tax relief to the city and Allegheny County and their taxpayers.

"Obviously, I'm very concerned about the whole situation. I've been concerned since the whole uncertainty began. There's been a cloud hovering over this project for the last couple of weeks or month," county Chief Executive Dan Onorato said.

State Sen. Jim Ferlo, who has raised concerns about Mr. Barden's ability to complete the financing in the past, also pressed the gaming board to move quickly to settle the issue.

He noted one of his concerns is that with the $120 million investment replacing Apollo's $150 million loan, Mr. Barden still appears to be $30 million short of the $780 million he said he needed to complete the casino's financing.

Mr. Bluhm could not be reached for comment yesterday.

The Chicago billionaire is the principal investor in the SugarHouse Casino, a $650 billion project along that city's riverfront that has failed to start construction yet. The gaming board awarded licenses for two Philadelphia casinos at the same time it gave one to Mr. Barden, but local opposition has stymied progress on both of those projects.
Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262. Gary Rotstein can be reached at grotstein@post-gazette.com or 412-263-1255.
First published on July 1, 2008 at 12:00 am

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