|By Tony Bizjak, The Sacramento Bee,
Calif.McClatchy-Tribune Regional News
February 27, 2010 --A member of the Maloof family, owners of the Sacramento Kings, confirmed Friday that they sat down with creditors to renegotiate a major loan for their hotel and casino in Las Vegas.
George Maloof declined to comment, however, on an online report that the family had breached contract covenants on a $380 million loan for the Palms, their Las Vegas hotel and casino, or that the owners of Harrah's may be zeroing in for a takeover.
Maloof characterized the debt restructuring as a typical move during tough times afflicting many in the gambling business.
"As far as our financing, every casino company over the past year has gone through amendments on their loan agreements or is going through amendments," Maloof said. "We're no different."
Las Vegas gambling consultant Bill Lerner of Union Gaming corroborated Maloof's comment about the struggles of Vegas casinos.
A report on debtwire.com this week citing unnamed sources said Texas Pacific Group, a co-owner of Harrah's Entertainment, is buying some Palms debt, possibly positioning itself for a takeover.
Maloof said private-company loan discussions are covered by confidentiality agreements, and indicated his family plans to continue to own and operate its showpiece hotel and casino.
Texas Pacific Group declined comment on the debtwire.com report.
The Maloofs recently put their long-held New Mexico beer distributorship up for sale.
Estimated at nearly $200 million, the sale is expected to be final in the next few weeks, Maloof said.
He said the family had been thinking for several years about selling the New Mexico business because family members no longer spent much time there and the family business was more focused on the Palms, the Kings and other ventures.
He acknowledged that the sale frees up cash, and said, "Some will be used at the Palms."
Maloof said the Palms debt restructuring does not affect the Kings or the team's $69 million loan with the city of Sacramento.
City Treasurer Russ Fehr said his review of the Kings' books tells him the team is capable of paying its annual $5 million-plus debt here.
Maloof said team finances have stabilized this year and "the Kings are in good shape. Our revenues are up."
The Kings and NBA face a critical juncture.
Officials want to reduce player salaries after the current contract expires in 2011, and there has been speculation that could lead to a season-canceling lockout in 2011.
Maloof said the Kings are positioned for that possibility. "If there is (a lockout), we are going to be strong," he said.
Call The Bee's Tony Bizjak, (916) 321-1059. Staff writer Dale Kasler contributed to this story.
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