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In Chapter 11 Detroit's Greektown Casino Seeks a Buyer;
Owes $755 million to Banks, Bondholders and Former Owners
By Margarita Bauza, Detroit Free PressMcClatchy-Tribune Regional News

Oct. 9, 2008 - Greektown Casino has hired an investment bank to seek buyers for the casino, which a consultant said is the preferred option for the casino's exit from Chapter 11.

Greektown CEO Craig Ghelfi also announced his retirement Wednesday at the state Gaming Control Board's monthly meeting, and a restructuring of the casino's management board is under way.

Ghelfi's retirement will be effective Oct. 31.

After missing financial targets for the last two months, Greektown Casino said it will attempt to open 200 hotel rooms in January, weeks earlier than the targeted date of Feb. 12 for opening the full 400-room hotel. It wants to benefit from events like the North American International Auto Show.

U.S. Bankruptcy Court Judge Walter Shapero was expected to file an order Wednesday appointing investment bank Moelis & Co. to seek financing and potential buyers for Greektown.

The bank, which has offices in New York, Los Angeles and Boston, specializes in restructurings, mergers and acquisitions.

Chuck Moore, senior managing director at the turnaround consulting firm Conway McKenzie & Dunleavy, which is leading Greektown through Chapter 11, said a sale is the preferred option by most parties involved and will more than likely be the route sought.

Moore announced the casino's board will be reduced from 12 to five members.

Four of the appointees would be outside professionals with experience in gaming operations, business restructuring and management.

Board members' names are to be released in the next couple of weeks pending background investigations required by the state.

The casino missed covenants in the bankruptcy financing loan agreement in August by $500,000. September numbers have not been completed.

August's projected revenue was $30.2 million but came in at $26.8 million.

September's projected revenue was $27.4 million, but came in at $25.2 million.

The casino owes $755 million to banks, bondholders and former owners.

The figure does not include investments by its current majority owner, the Sault Ste. Marie Tribe of Chippewa Indians, who have put $47 million into the operation over the last 10 months.

Casino analyst Jane Pedreira, formerly with Lehman Brothers, said the longer Greektown waits to sell, the better chance it has to get a fair price.

"If the hotel doesn't open until February, you do not know what the hotel will do," Pedreira said. "People will lowball it without knowing the revenues.

"You can make assumptions about the hotel but it's always easier when you are looking at hard numbers," she added. "I think absolutely there will be interest despite the credit market. There are a few people out there with capital. It's not an impossible situation."

Also at Wednesday's meeting, Rick Kalm announced four restaurants are being dropped from Greektown's meals comp program as it conducts an investigation into irregularities.

The meals comp program was created as a way for casinos to help compensate local restaurants for the loss of regular business once the casinos opened.

The complimentary meal coupons are used to reward regular casino customers.

Holiday Inn Express voluntarily dropped out of the program. Sweet Georgia Brown, Laikon Cafe and Bahn Thai Cafe -- all in the Greektown neighborhood -- were dropped for not providing information requested by the casino, such as tax records and receipts.

MGM Grand Detroit revenues were up 26.98% in September to $44.8 million, up from $35.3 million in September 2007.

MotorCity Casino revenues fell 9.46%, to $36.1 million in September from $39.9 million in September 2007.

Greektown revenues slipped 4.15% to $25.2 million this September, from $27.3 million in September 2007.

Contact MARGARITA BAUZA at 313-222-6823 or mbauza@freepress.com.

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Copyright (c) 2008, Detroit Free Press

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