Indianapolis Downs, LLC, which operates the Indiana Live! casino and Indiana Downs, today announced it and a related entity have filed voluntary petitions in U.S. Bankruptcy Court for the District of Delaware to reorganize under Chapter 11 of the United States Bankruptcy Code
. The company noted that its facilities will continue to operate as usual during the restructuring process and that there will be no interruption in services.
In its filing, Indianapolis Downs stated it possesses strong underlying fundamentals, operates on a cash positive basis and generates enough revenue to pay its operating expenses. However, the company noted it has been operating with a debt burden significantly greater than anticipated and beyond its ability to service under current terms. The debt largely reflects a $250 million initial state-mandated license fee, as well as a high statutory tax rate.
The company said that, in conjunction with this filing and pending court approval, it has secured debtor-in-possession (DIP) financing of approximately $103 million from a group led by Wells Fargo. The facility provides for immediate access of up to $5 million and will lower the company’s interest expenses.
Indianapolis Downs said it preferred to address the debt restructuring in a consensual and negotiated 'standstill' period outside the court process, and worked earnestly with its lenders to accomplish that objective. However, it was unable to negotiate the necessary outcome, and faced expiration of the forbearance agreement on its loan.
“This filing is unlike many debt restructuring cases because Indianapolis Downs has steadily grown its revenue and market share since opening,” stated Gregory F. Rayburn, chief restructuring officer. “Indiana Live! and Indiana Downs racino is an operationally profitable, but new, business that has not yet achieved its full potential.
“As a result, we see this decision as an enabling step for our company, as the process will allow us to restructure our debt, make operational improvements and benefit from other available value enhancements. Most importantly, this process will provide Indianapolis Downs with the time we need to enhance our enterprise value and the value of our secured lenders’ collateral.”
To ensure there is no interruption in services, and customers continue to enjoy the latest slot machines, electronic table games, live entertainment, award-winning dining and live racing that they have come to expect of Indiana Live! casino and Indiana Downs, the company is seeking approval from the court for a variety of First Day Motions. These motions include requests to maintain and honour its Live! Rewards Club and Indiana Downs Players Club customer programs, maintain and honour promotional programs, and make wage and salary payments and other benefits to employees and agents. Additionally, the company intends to pay providers of goods and services delivered post-petition in the ordinary course of business, and will seek approval to pay certain vendors for goods and services delivered pre-petition.
Indianapolis Downs is committed to communicating to each of its stakeholders throughout this process. The company added that this development will have no adverse impact on horse racing at Indiana Downs in 2011 or at any time within the foreseeable future.
(Indianapolis Downs, LLC)