The other shoe drops
"International lender Credit Suisse has notified North Shore casino developer Don Barden he is in default of a $200 million bridge loan for the project according to a petition filed with the state Gaming Control Board. The board today is considering a request by Mr. Barden to approve a new financing plan for the casino that includes a change in the company holding the license for the project. Mr. Barden would no longer be the majority owner of the casino, according to his spokesman. Under the revised plan, Mr. Barden would retain about 25 percent interest in the casino. Walton Street Capital Fund 6, which is investing $120 million to complete financing for the project, will be the majority owner."
Radio Internet personality John McIntire said it best: This guy just doesn't have the juice.
You can say a lot of things about Don Barden (awesome mustache, for instance), but you can't say that he didn't give us ample warning that this sort of thing might happen. Though the most visible signs have come in the mast month -- stalled construction, revised plans -- the fact it is, he never was able to arrange a complete financing pacakge, even though he's had nearly two years to do it. It's become apparent that banks simply don't want to lend Mr. Barden their money.
You can't blame him totally for that. The credit crunch that is affecting would-be homebuyers is affecting would-be casino owners, too. Markets change. But you have to think he's regretting parting with Jefferies & Co.: "Jefferies & Co. already has provided a $450 million financing commitment for the Pittsburgh casino, enough to cover the entire construction," the Barden team said last year. But Barden didn't like the borrowing terms, and went looking for other financiers.
He still hasn't found them.
And you have to think that the Pennsylvania Gaming Control Board is regretting giving Mr. Barden the casino license -- this isn't as bad as giving a license to a guy who goes on to be indicted, but it's not good.
... So what is the line of succession? Can he just give the license to anyone he wants?
Yes -- but only if the state gaming board permits it:
"A license or permit issued by the board is a grant of the privilege to conduct a business in this Commonwealth. Except as permitted by section 1328(relating to change in ownership or control of slot machine licensee), a license or permit granted or renewed pursuant to this part shall not be sold, transferred or assigned to any other person; nor shall a licensee or permittee pledge or otherwise grant a security interest in or lien on the license or permit. Nothing contained in this part is intended or shall be construed to create in any person an entitlement to a license. The board has the sole discretion to issue, renew, condition or deny the issuance of a slot machine license based upon the purposes and requirements of this part."
... On that issue, says the ubiquitous PittGirl:
"I don’t think Don Barden should be allowed to transfer the license. He was awarded it, he defaulted, the runner-up should get it. When Miss America is caught in a porn scandal, she doesn’t get to choose who gets the crown after she’s been stripped of it does she? 'Um. Respectfully, I’d like to give the title of Miss America and the crown to my equally hot sister, Trina. I promise she’s worthy and she totally cares about peace in the Middle East … and the Iraq.'"
At minimum, Isle of Capri and Forest City have told-ya-so rights for the next several weeks.
... Says Teacher Wordsmith Madman:
"Anyone in Pittsburgh -- or, hell, in the whole tri-state area -- who was not yet convinced that the Pennsylvania Gaming Control Board made one of the biggest, most boneheaded blunders in the history of the commonwealth when it awarded this city's casino license to Don Barden and his Majestic Star House of Financial Cards, you should read the (let's face it, inevitable) piece that the Pittsburgh Post-Gazette's Mark Belko posted about a half hour ago. Everyone on that board should be fired. Or at least severely beaten. And then made to march from the Hill to Station Square, back through downtown and over to that padlocked North Shore construction site, where we could all chant No due diligence, no peace! over and over and over again. Or at least until we'd permanently branded each and every one of their forheads with the scarlet letters DA."
... And what of Barden's promise to pay $7.5 million a year for the new Pens arena? Does that just vanish, too, if he's not the majority owner? Will the new majority owners be bound by an agreement Don Barden made?
"Taxpayers shouldn't be left holding the bag for the $7.5 million annually that North Shore casino owner Don Barden promised to contribute toward a Penguins arena, a state senator said Wednesday. Republican Sen. Jane Orie of McCandless asked Gov. Ed Rendell in a letter to make a public commitment that taxpayers and the Penguins won't be stuck with the bill if Barden's financing for the casino falls through. 'We are confident he will meet his obligations,' Chuck Ardo, Rendell's spokesman, said Wednesday about Barden."
... Protestors also showed up in Harrisburg today to argue against Indiana's Centaur Inc., which is in line to receive a racetrack casino license. We'll have more on that soon.