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Thursday, March 03, 2005

Ind. Go't. - More on Trump withdrawl from French Lick casino scene

Those who had been looking forward to Donald Trump's apprentices being sent to French Lick to bottle and market "pluto water" for the newest Trump casino are bound to be disappointed this morning.

"Trump bails out of casino plan for French Lick" is the headline to Michele McNeil's story today in the Indianapolis Star. Some quotes:

On Wednesday, six months after awarding Indiana's 11th casino to Trump Hotels & Casino Resorts, state gambling regulators announced they must find another company to build the French Lick casino. Trump did not meet a state-imposed deadline.

"I'm going to do everything I can to make sure your dream comes true," Ernest Yelton, the new executive director of the Indiana Gaming Commission, told residents at a meeting in French Lick on Wednesday.

And Yelton assured the audience -- many wearing orange shirts promoting the casino -- that they would get one. "There has never been any hint that this boat will move from Orange County," he said. * * *

Yelton said the Gaming Commission could decide to reopen the bidding process or narrow it to the groups that lost last year. Two companies that lost to Trump say they're still interested in building the casino. * * *

Negotiations between the state and Trump began to unravel Feb. 17, when gambling regulators delivered a list of demands to the company. The state wanted complete details on how the project would be funded and a strict timeline for approval.

Yelton, with the blessing of Gov. Mitch Daniels, hired a bankruptcy lawyer and casino expert to help review the deal and craft the list of demands. Trump told gaming officials Monday it couldn't meet the demands and needed more time. Yelton wouldn't extend the deadline. * * *

In July, the Gaming Commission voted 4-2 to award the project to Trump, which had the most ambitious proposal. Trump's casino company proposed a bigger facility with more gambling revenue than the two competing bids.

The commission awarded the project to Trump even though the company was involved in a financial reorganization as it tried to get out from under $1.8 billion in debt. In addition, Trump provided no specifics as to how it would pay for the project.

Much of the commission that approved the Trump bid is gone; four of the seven seats are open.

Less than a month after the project was awarded, the company said its ability to follow through on the project was "uncertain," according to filings with the Securities and Exchange Commission.

Compounding problems for Trump was an April decision of the Indiana Tax Court -- one later upheld by the Indiana Supreme Court -- ordering the state's 10 riverboats to pay back taxes owed. The issue involved whether riverboats could deduct wagering taxes from their income tax bills. Trump, which operates a riverboat in Gary, owes an estimated $20.9 million.

In a disclosure statement filed last month with the New Jersey bankruptcy court, Trump acknowledged it had an offer from an unidentified party to buy the Gary riverboat and was considering the offer.

Grace Schneider of the Louisville Courier Journal has some additional information:
FRENCH LICK, Ind. -- Citing grave financial concerns, Indiana's top gambling regulator announced yesterday that the state has dropped negotiations with billionaire Donald Trump's company to build and operate a casino in Orange County.

Ernest Yelton, executive director of the Indiana Gaming Commission, assured casino supporters that the state will move quickly to find another operator. While it's not clear whether the bidding process will be reopened, he said an alternate developer could be selected in the next few months. "You have my promise, and my guarantee, that the state will move expeditiously," he said.

Yelton told about 80 area residents, casino representatives and members of the local panel overseeing the project that the gaming commission gave Trump executives a list of demands and deadlines late last week. That was done after experts enlisted by the state uncovered troubling financial information in the bankruptcy proposal Trump Hotels and Casino Resorts Inc. filed in New Jersey. * * *

The Trump company was selected over two other investment groups. But the project has faced a string of setbacks ever since. Its attempts to refinance $1.8 billion in debt unraveled last fall, leading the company to file for bankruptcy in November.

Gov. Mitch Daniels, meanwhile, was so concerned about the company's viability that he asked the gaming commission to postpone awarding a contract to Trump until he took office in January. The governor also asked Yelton, whom he appointed in early January, to take a hard look at Trump's proposal.

Yesterday, Yelton cited the work of Purdue University finance professor Charlene Sullivan and Michael Hile, an Indianapolis bankruptcy lawyer, for helping the commission ferret out some critical information.

The most troubling was Trump's intention to use its casino properties, including the Orange County project, as collateral for a multimillion-dollar loan -- money that would be used primarily to refurbish the company's flagship Trump Taj Mahal casino in Atlantic City, N.J.

Posted by Marcia Oddi on March 3, 2005 08:17 AM
Posted to Indiana Government