|By John Wisely, Detroit Free
PressMcClatchy-Tribune Regional News
Mar. 10, 2010--The Michigan Gaming Control Board approved a tax rollback for Greektown Casino on Tuesday, creating a boost to the casino's bottom line and marking another milestone on its emergence from bankruptcy.
The reduction of tax from 24% to 19% means the casino has fulfilled the terms of its development agreement with the City of Detroit, which required, among other things, that the casino build and operate a 400-room hotel.
In 2009, Greektown Casino reported $346 million in adjusted revenue, so the tax rollback would add $17.4 million to the casino's bottom line based on those figures.
Rick Kalm, executive director of the Gaming Control Board, said inspectors have walked through the Greektown hotel to ensure it is fully operational, but didn't recommend approval by the board until the casino and the city worked out their differences. The Detroit City Council approved a settlement in February that would transfer the casino license to new owners after it emerges from bankruptcy.
"We're here today to fully support the request for the tax rollback for Greektown Casino," said Michael Schaller, a lawyer for the city. Greektown has been paying the higher tax since its inception, and the rollback is retroactive to Feb. 15, 2009, when the hotel opened.
The casino is entitled to $18.5 million back, but will pay about $16.6 million of that to the city of Detroit to settle disputes.
Casino officials told the board they are on track to emerge from bankruptcy by June 30, as required by the court. The new company will emerge with an improved balance sheet having cut debt in bankruptcy from about $750 million to about $400 million, said Charles Moore, senior managing director at Conway MacKenzie, a capital management firm and the lead restructuring adviser to Greektown Casino.
Under the restructuring, Moore said, the casino expects to have debt costs of about $52 million a year, which it can easily cover.
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