Debt Part of Ilitch Equation
Featured originally as a side-bar to a story entitled Ilitch teams with tribe on N.Y. casinos: Long Island plans could top $1 billion
By Bill Shea
In January 2009, Marian Ilitch injected $45 million into her MotorCity Casino after lenders -- including Highland Capital Management LP -- threatened to hike interest rates to 18 percent on the $625 million loan her CCM Merger Inc. got in 2005 to finance purchase of the casino and for the later construction of its 300-room hotel.
The lenders reportedly wanted the additional investment because the casino was in jeopardy of violating its loan terms, a situation created when gambling revenue began to fall with the recession.
Deutsche Bank and Merrill Lynch arranged the loan in 2005.
The total financing for MotorCity is believed to be $950 million through a highly leveraged mix of fixed- and variable-rate bank debt and junk bonds, according to Forbes.
Ilitch paid $525 million to buy the majority ownership of the casino in April 2005 from Las Vegas-based MGM Grand/Mirage Casinos' Mandalay Resort Group, the MGM subsidiary that owned MotorCity.
She also paid Detroit entrepreneur Herb Strather $106 million for his Atwater Entertainment Associates LLC's 11.5 percent stake in MotorCity.
Another $85 million to $100 million went to former Ilitch partner Tom Celani for his 10 percent stake.
The Detroit Tigers, owned separately by Mike Ilitch, borrowed $140 million in August 2005 from a syndicate of 11 financial institutions, led by what is now Sumitomo Mitsui Bank, to refinance what had been $115 million remaining in debt from the original $145 million loan to build Comerica Park, industry magazine Sports Business Journal reported at the time.
The team has declined to comment on its current stadium debt.
Public debt on Comerica Park is through the Detroit-Wayne County Stadium Authority.