|By Steve Green, Las Vegas
SunMcClatchy-Tribune Regional News
May 18, 2012--The Silver Legacy Resort Casino in Reno, half owned by MGM Resorts International, voluntarily filed for Chapter 11 bankruptcy reorganization on Thursday in U.S. Bankruptcy Court for Nevada.
Silver Legacy is adjacent to MGM Resorts' 1,572-room Circus Circus Reno.
In a statement, Silver Legacy said the bankruptcy wouldn't affect its operations.
Silver Legacy had some $143 million of outstanding senior secured notes due in March, but did not repay that debt because the recession hurt its business. It had been in talks with noteholders about restructuring the debt.
One plan on the table called for noteholders to receive $100 million in cash for their notes to be funded by a new $70 million first-lien loan, $15 million in cash from the property partners and $15 million in cash from the property's cash balances. The property also would issue $27.5 million in new second-lien notes under this plan, Silver Legacy said in a court filing.
Silver Legacy, in Thursday's bankruptcy filing, said it has been cash-flow positive and hopes to quickly reorganize thanks to the support of a restructuring agreement by a holder of a "substantial portion" of its debt. That holder is Capital Research and Management Co.
MGM Resorts International had written off its investment in Silver Legacy to zero in the fourth quarter of 2011, taking a $23 million charge against earnings at the time, and it is not liable for the notes.
The $360 million Silver Legacy opened in July 1995 in downtown Reno. It has 1,711 hotel rooms, six restaurants and a casino with 1,399 slot machines and 63 table games.
The other half of Silver Legacy is owned by Eldorado LLC, owner of the nearby Eldorado Hotel & Casino.
(c)2012 the Las Vegas Sun (Las Vegas, Nev.)
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