According to various news accounts, the latest revenue results released by the Michigan Gaming Control Board (MGCB), indicate the overall gaming market in Detroit saw a 4.2% decline in May; however, Greektown Casino-Hotel appears to have bucked the trend for the fourth month in a row with a stunning 7.2% year-over-year revenue increase for the month. (At the time of this post, Data had yet to be posted to the MGCB web site.)
Greektown was the only Detroit casino to see an increase, while revenues at MGM Grand Detroit and MotorCity Casino dropped 10.9% and 3.6% respectively.
It should be noted that Greektown in particular has struggled financially in recent years and in May 2008 filed for bankruptcy protection. So, bragging rights about revenue growth at Greektown in May 2009 as compared to May 2008 should be tempered. May 2008 represented perhaps the lowest point in Greektown's financial health.
Despite a major renovation at MotorCity Casino including the addition off theaters, conference and restaurant amenities, and a 400-room luxury hotel, it has generally failed to meet financial expectations since Marian Ilitch acquired control of the property from MGM Mirage in 2005. Both Moody's and Standard & Poor's have now established a steady pattern of declining credit ratings for MotorCity's financial parent during this period.
Among numerous other affiliates, Ilitch controls CCM Merger, Inc. which is the highly leveraged financial parent of Detroit Entertainment LLC (DELLC) which is the entity that does business as (dba) MotorCity Casino. In December 2008, CCM Merger broke its financial convenants and as a result, investors demanded Marian Ilitch inject $45 million cash into the enterprise.
Financial results published by MGCB
Showing posts with label Moody's. Show all posts
Showing posts with label Moody's. Show all posts
Thursday, June 11, 2009
Friday, February 06, 2009
To calm casino investors Ilitch forced to pony up $45 million cash injection
2.06.09Motor City Adds More Equity; Deal Passes
An amendment for Motor City Casino passed last Tuesday after a game of tug-of-war between investors and the company. The two reached an agreement when Motor City parent company CCM Merger committed to a $45 million equity injection.
Deutsche Bank launched the amendment Jan. 13, and investors balked when the company asked for loosened leverage covenants but CCM, a vehicle of Detroit Red Wings owner Marian Ilitch, did not offer to put equity into the deal (CIN, 1/19). CCM then came back to investors with a $20 million equity injection offer.
"It was a non-starter," said one investor. "[The $45 million] is what got the deal done. Everything else was secondary to that."
The pricing on the facility was raised 300 basis points to LIBOR plus 5 1/2%, and a LIBOR floor of 3% was added.
A spokeswoman for the Detroit-based company declined comment, and a spokeswoman for Ilitch Holdings, the parent company of CCM did not return a call.
Friday, January 30, 2009
Moody's downgraded Credit Rating of MotorCity Casino's parent three times in ten months
Moody's Investor ServiceIssuer: CCM Merger, Inc.
Long Term Corporate Family Credit Ratings History
Moody's has been forced to downgrade the Corporate Credit Ratings of CCM Merger, Inc., parent company of MotorCity Casino, three times in the last ten months. The ratings have slid from B1 t0 B2 to B3 to Caa1 all in less than a year.
Tuesday, January 27, 2009
Ilitch offers another $20M influx for MotorCity if investors will loosen up lending convenants
1.26.09
Red Wings’ Ilitch Offers More Cash to Appease MotorCity Lenders
By Pierre Paulden and Michael J. Moore
Jan. 26 (Bloomberg) -- Marian Ilitch, the owner of the National Hockey League’s Detroit Red Wings, offered to pump $20 million into her MotorCity Casino to obtain a loan amendment as gambling revenue falls.
Ilitch made the proposal after Credit Suisse AG’s asset management arm, Highland Capital Management LP and other investors asked her to invest more funds in the property because it’s at risk of violating terms of a $606 million loan, according to investors with knowledge of the situation. Lenders had threatened to raise the interest on the loan to 18 percent a year if she didn’t, said the investors, who declined to be identified because the talks are private.
MotorCity, owned by Ilitch’s closely held CCM Merger Inc., is a victim of the slump in Detroit, home to General Motors Corp. and Ford Motor Co., and the nationwide decline in gambling profits. Gaming revenue at the 400-room hotel and casino tumbled 7.1 percent in November and 11 percent in December from a year earlier, according to Moody’s Investors Service.
“If they don’t get the amendment, they could be in default,” said Keith Foley, a Moody’s analyst in New York. “The amendment is something that they need.”
CCM also offered to increase the interest rate on the loan to either 8.5 percent or 5.5 percentage points more than the London interbank offered rate, whichever is higher, according to the investors. In return, the company is seeking relaxed loan terms through the second quarter of 2011, after previously asking for covenant relief until the loan matures in July 2012. Standard & Poor’s LCD reported the offer earlier today.
Should CCM fail to reach an agreement, it may lose access to a $100 million credit line that it needs to pay a $50 million Economic Development Corp. bond in May, according to Foley. CCM already invested $25 million of equity in September, he said.
Falling Prices
The casino’s term loan due in 2012 was quoted at 42 cents on the dollar, according to a Jan. 20 report from Frankfurt- based Deutsche Bank AG. Its $300 million of 8 percent bonds due in 2013 trade at 55.6 cents on the dollar to yield 25 percent, according to prices compiled by Bloomberg.
“MotorCity Casino’s parent company is in the process of negotiating changes to its credit agreement to bring the financial covenants that were set in 2005 to levels consistent with those already in place for other gaming operators across the United States,” Jacci Woods, a MotorCity spokeswoman, said last week.
Woods declined to comment on details of the talks. Karen Cullen, a spokeswoman for Ilitch Holdings, didn’t return a call seeking comment today.
Declining Markets
Creditors are requiring increased rates from borrowers deemed high-yield, high-risk, and in jeopardy of breaking debt agreements after the so-called leveraged loan market lost 29 percent last year. Companies rated below Baa3 by Moody’s and BBB-by S&P are considered high-yield, or junk.
Borrowers paid an average 1.64 percentage points more in interest last year to amend borrowing agreements needed to avoid default, according to S&P’s LCD data as of September.
Ilitch, who was born in 1933 to Macedonian immigrant parents, is the wife of Michael Ilitch, the 79-year-old owner of Major League Baseball’s Detroit Tigers. The two co-founded closely held pizza chain Little Caesar Enterprises Inc.
CCM used the bonds and loans to buy the 75 percent stake in MotorCity in April 2005 that Ilitch didn’t already own from Las Vegas-based Mandalay Resort Group and other investors. MotorCity opened the hotel in November 2007, adding to the 75,000-square- foot casino.
Debt Burden
Debt rose to about 7 times earnings before interest, taxes, depreciation and amortization from 6.1 times in December as gambling revenue fell amid the economic slowdown, according to a Jan. 16 report by Foley. Terms of the loan require the ratio not exceed 6.1, and the limit will tighten to 5.9 times this quarter, he wrote in a December report.
Casinos across the U.S. are suffering as consumers cut spending in the recession. Revenue on the Las Vegas Strip, the biggest U.S. gambling center, slid 9.3 percent in the first 11 months of 2008 and was poised for its biggest annual drop since data started being compiled in the mid-1980s, the Nevada Gaming Control Board said. Casino revenue in Atlantic City, New Jersey, tumbled a record 19 percent in December, the New Jersey Casino Control Commission said.
Trump Entertainment Resorts Inc., founded by developer Donald Trump, is negotiating a debt restructuring after the Atlantic City, New Jersey-based casino owner skipped a $53 million interest payment that was due Dec. 1.
Detroit’s Declines
Detroit is facing more job losses than the rest of the country after U.S. auto sales tumbled 18 percent last year. Unemployment for the metropolitan area was 9.5 percent in November, up from 7.6 percent a year earlier, data compiled by the Bureau of Labor Statistics show. The national average was 6.7 percent that month.
U.S. automakers are also suffering as the car industry in Europe declines. New car registrations in the European Union fell 18.2 percent in December, according to a Jan. 15 report from the European Automobile Manufacturers Association in Brussels.
“Historically, even with the high unemployment rate, Detroit had done okay on a relative sense,” Foley said. “But November and December numbers, there was a sharp drop-off.”
Deutsche Bank, which arranged the MotorCity loan in 2005, proposed Jan. 13 that CCM increase interest payments to a minimum of 7.75 percent or 5 percentage points more than Libor when Libor exceeds 2.75 percent. CCM currently pays 2 percentage points more than Libor, which ended last week at 1.17 percent.
Increasing Ratios
CCM offered to pay a fee of 50 basis points to lenders if they agreed to the change, according to S&P’s LCD, which reported the proposal earlier this month. A basis point is 0.01 percentage point. In exchange, the debt-to-earnings ratio would be increased to 8 times, S&P’s LCD said, without saying where it got the information.
A majority of the investors rejected the offer and asked Ilitch to inject additional cash into the casino, said the investors, who declined to be identified.
Dallas-based Highland, Credit Suisse of Zurich and other lenders said that without more equity, Ilitch must pay annual interest of 18 percent or 15 percentage points more than Libor, whichever is higher, according to the investors. The interest would be split between cash and payment-in-kind, they said.
Credit Suisse spokeswoman Suzanne Fleming, Highland partner Jack Yang and Deutsche Bank spokesman Scott Helfman declined to comment.
To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net ; Michael J. Moore in New York at mmoore55@bloomberg.net.
By Pierre Paulden and Michael J. Moore
Jan. 26 (Bloomberg) -- Marian Ilitch, the owner of the National Hockey League’s Detroit Red Wings, offered to pump $20 million into her MotorCity Casino to obtain a loan amendment as gambling revenue falls.
Ilitch made the proposal after Credit Suisse AG’s asset management arm, Highland Capital Management LP and other investors asked her to invest more funds in the property because it’s at risk of violating terms of a $606 million loan, according to investors with knowledge of the situation. Lenders had threatened to raise the interest on the loan to 18 percent a year if she didn’t, said the investors, who declined to be identified because the talks are private.
MotorCity, owned by Ilitch’s closely held CCM Merger Inc., is a victim of the slump in Detroit, home to General Motors Corp. and Ford Motor Co., and the nationwide decline in gambling profits. Gaming revenue at the 400-room hotel and casino tumbled 7.1 percent in November and 11 percent in December from a year earlier, according to Moody’s Investors Service.
“If they don’t get the amendment, they could be in default,” said Keith Foley, a Moody’s analyst in New York. “The amendment is something that they need.”
CCM also offered to increase the interest rate on the loan to either 8.5 percent or 5.5 percentage points more than the London interbank offered rate, whichever is higher, according to the investors. In return, the company is seeking relaxed loan terms through the second quarter of 2011, after previously asking for covenant relief until the loan matures in July 2012. Standard & Poor’s LCD reported the offer earlier today.
Should CCM fail to reach an agreement, it may lose access to a $100 million credit line that it needs to pay a $50 million Economic Development Corp. bond in May, according to Foley. CCM already invested $25 million of equity in September, he said.
Falling Prices
The casino’s term loan due in 2012 was quoted at 42 cents on the dollar, according to a Jan. 20 report from Frankfurt- based Deutsche Bank AG. Its $300 million of 8 percent bonds due in 2013 trade at 55.6 cents on the dollar to yield 25 percent, according to prices compiled by Bloomberg.
“MotorCity Casino’s parent company is in the process of negotiating changes to its credit agreement to bring the financial covenants that were set in 2005 to levels consistent with those already in place for other gaming operators across the United States,” Jacci Woods, a MotorCity spokeswoman, said last week.
Woods declined to comment on details of the talks. Karen Cullen, a spokeswoman for Ilitch Holdings, didn’t return a call seeking comment today.
Declining Markets
Creditors are requiring increased rates from borrowers deemed high-yield, high-risk, and in jeopardy of breaking debt agreements after the so-called leveraged loan market lost 29 percent last year. Companies rated below Baa3 by Moody’s and BBB-by S&P are considered high-yield, or junk.
Borrowers paid an average 1.64 percentage points more in interest last year to amend borrowing agreements needed to avoid default, according to S&P’s LCD data as of September.
Ilitch, who was born in 1933 to Macedonian immigrant parents, is the wife of Michael Ilitch, the 79-year-old owner of Major League Baseball’s Detroit Tigers. The two co-founded closely held pizza chain Little Caesar Enterprises Inc.
CCM used the bonds and loans to buy the 75 percent stake in MotorCity in April 2005 that Ilitch didn’t already own from Las Vegas-based Mandalay Resort Group and other investors. MotorCity opened the hotel in November 2007, adding to the 75,000-square- foot casino.
Debt Burden
Debt rose to about 7 times earnings before interest, taxes, depreciation and amortization from 6.1 times in December as gambling revenue fell amid the economic slowdown, according to a Jan. 16 report by Foley. Terms of the loan require the ratio not exceed 6.1, and the limit will tighten to 5.9 times this quarter, he wrote in a December report.
Casinos across the U.S. are suffering as consumers cut spending in the recession. Revenue on the Las Vegas Strip, the biggest U.S. gambling center, slid 9.3 percent in the first 11 months of 2008 and was poised for its biggest annual drop since data started being compiled in the mid-1980s, the Nevada Gaming Control Board said. Casino revenue in Atlantic City, New Jersey, tumbled a record 19 percent in December, the New Jersey Casino Control Commission said.
Trump Entertainment Resorts Inc., founded by developer Donald Trump, is negotiating a debt restructuring after the Atlantic City, New Jersey-based casino owner skipped a $53 million interest payment that was due Dec. 1.
Detroit’s Declines
Detroit is facing more job losses than the rest of the country after U.S. auto sales tumbled 18 percent last year. Unemployment for the metropolitan area was 9.5 percent in November, up from 7.6 percent a year earlier, data compiled by the Bureau of Labor Statistics show. The national average was 6.7 percent that month.
U.S. automakers are also suffering as the car industry in Europe declines. New car registrations in the European Union fell 18.2 percent in December, according to a Jan. 15 report from the European Automobile Manufacturers Association in Brussels.
“Historically, even with the high unemployment rate, Detroit had done okay on a relative sense,” Foley said. “But November and December numbers, there was a sharp drop-off.”
Deutsche Bank, which arranged the MotorCity loan in 2005, proposed Jan. 13 that CCM increase interest payments to a minimum of 7.75 percent or 5 percentage points more than Libor when Libor exceeds 2.75 percent. CCM currently pays 2 percentage points more than Libor, which ended last week at 1.17 percent.
Increasing Ratios
CCM offered to pay a fee of 50 basis points to lenders if they agreed to the change, according to S&P’s LCD, which reported the proposal earlier this month. A basis point is 0.01 percentage point. In exchange, the debt-to-earnings ratio would be increased to 8 times, S&P’s LCD said, without saying where it got the information.
A majority of the investors rejected the offer and asked Ilitch to inject additional cash into the casino, said the investors, who declined to be identified.
Dallas-based Highland, Credit Suisse of Zurich and other lenders said that without more equity, Ilitch must pay annual interest of 18 percent or 15 percentage points more than Libor, whichever is higher, according to the investors. The interest would be split between cash and payment-in-kind, they said.
Credit Suisse spokeswoman Suzanne Fleming, Highland partner Jack Yang and Deutsche Bank spokesman Scott Helfman declined to comment.
To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net ; Michael J. Moore in New York at mmoore55@bloomberg.net.
Monday, January 26, 2009
MotorCity Lenders Call on Red Wings’ owner Ilitch for Cash
1.26.09
By Pierre Paulden and Michael J. Moore
Jan. 26 (Bloomberg) -- Marian Ilitch, the owner of the National Hockey League’s Detroit Red Wings, is facing calls from lenders to pump more money into her MotorCity Casino or pay an almost sixfold increase in interest as gambling revenue falls.
Credit Suisse AG’s asset management arm, Highland Capital Management LP and other investors told Ilitch to boost capital in the property because it’s at risk of violating terms of a $606 million loan, according to investors with knowledge of the situation. If she doesn’t, lenders may raise the interest on the loan to 18 percent a year, said the investors, who declined to be identified because the talks are private.
MotorCity, owned by Ilitch’s closely held CCM Merger Inc., is a victim of the slump in Detroit, home to General Motors Corp. and Ford Motor Co., and the nationwide decline in gambling profits. Gaming revenue at the 400-room hotel and casino tumbled 7.1 percent in November and 11 percent in December from a year earlier, according to Moody’s Investors Service.
“If they don’t get the amendment, they could be in default,” said Keith Foley, a Moody’s analyst in New York. “The amendment is something that they need.”
Should CCM fail to reach an agreement, it may lose access to a $100 million credit line that it needs to pay a $50 million Economic Development Corp. bond in May, according to Foley. CCM already invested $25 million of equity in September, he said.
Falling Prices
The casino’s term loan due in 2012 was quoted at 42 cents on the dollar, according to a Jan. 20 report from Frankfurt-based Deutsche Bank AG. Its $300 million of 8 percent bonds due in 2013 trade at 55.6 cents on the dollar to yield 25 percent, according to prices compiled by Bloomberg.
“MotorCity Casino’s parent company is in the process of negotiating changes to its credit agreement to bring the financial covenants that were set in 2005 to levels consistent with those already in place for other gaming operators across the United States,” said Jacci Woods, a MotorCity spokeswoman.
Woods declined to comment on details of the talks. Karen Cullen, a spokeswoman for Ilitch Holdings, referred questions to MotorCity.
Creditors are requiring increased rates from borrowers deemed high-yield, high-risk, and in jeopardy of breaking debt agreements after the so-called leveraged loan market lost 29 percent last year. Companies rated below Baa3 by Moody’s and BBB- by Standard & Poor’s are considered high-yield, or junk.
Borrowers paid an average 1.64 percentage points more in interest last year to amend borrowing agreements needed to avoid default, according to Standard & Poor’s LCD data as of September.
Tigers, Little Caesar
Ilitch, who was born in 1933 to Macedonian immigrant parents, is the wife of Michael Ilitch, the 79-year-old owner of Major League Baseball’s Detroit Tigers. The two co-founded closely held pizza chain Little Caesar Enterprises Inc.
CCM used the bonds and loans to buy the 75 percent stake in MotorCity in April 2005 that Ilitch didn’t already own from Las Vegas-based Mandalay Resort Group and other investors. MotorCity opened the hotel in November 2007, adding to the 75,000-square- foot casino.
Debt rose to about 7 times earnings before interest, taxes, depreciation and amortization from 6.1 times in December as gambling revenue fell amid the economic slowdown, according to a Jan. 16 report by Foley. Terms of the loan require the ratio not exceed 6.1, and the limit will tighten to 5.9 times this quarter, he wrote in a December report.
Casino Revenue
Casinos across the U.S. are suffering as consumers cut spending in the recession. Revenue on the Las Vegas Strip, the biggest U.S. gambling center, slid 9.3 percent in the first 11 months of 2008 and was poised for its biggest annual drop since data started being compiled in the mid-1980s, the Nevada Gaming Control Board said. Casino revenue in Atlantic City, New Jersey, tumbled a record 19 percent in December, the New Jersey Casino Control Commission said.
Trump Entertainment Resorts Inc., founded by developer Donald Trump, is negotiating a debt restructuring after the Atlantic City, New Jersey-based casino owner skipped a $53 million interest payment that was due Dec. 1.
Detroit is facing more job losses than the rest of the country after U.S. auto sales tumbled 18 percent last year. Unemployment for the metropolitan area was 9.5 percent in November, up from 7.6 percent a year earlier, data compiled by the Bureau of Labor Statistics show. The national average was 6.7 percent that month.
U.S. automakers are also suffering as the car industry in Europe declines. New car registrations in the European Union fell 18.2 percent in December, according to a Jan. 15 report from the European Automobile Manufacturers Association in Brussels.
Detroit’s Deterioration
“Historically, even with the high unemployment rate, Detroit had done okay on a relative sense,” Foley said. “But November and December numbers, there was a sharp drop-off.”
Deutsche Bank, which arranged the MotorCity loan in 2005, proposed Jan. 13 that CCM increase interest payments to a minimum of 7.75 percent or 5 percentage points more the London interbank offered rate when Libor exceeds 2.75 percent. CCM currently pays 2 percentage points more than Libor, which ended last week at 1.17 percent.
CCM offered to pay a fee of 50 basis points to lenders if they agreed to the change, according to S&P’s LCD, which reported the proposal earlier this month. A basis point is 0.01 percentage point. In exchange, the debt-to-earnings ratio would be increased to 8 times, S&P’s LCD said, without saying where it got the information.
A majority of the investors rejected the offer and asked Ilitch to inject additional cash into the casino, said the investors, who declined to be identified.
Dallas-based Highland, Credit Suisse of Zurich and other lenders said that without more equity, Ilitch must pay annual interest of 18 percent or 15 percentage points more than Libor, whichever is higher, according to the investors. The interest would be split between cash and payment-in-kind, they said.
Credit Suisse spokeswoman Suzanne Fleming, Highland partner Jack Yang and Deutsche Bank spokesman Scott Helfman declined to comment.
To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net; Michael J. Moore in New York at mmoore55@bloomberg.net.
Last Updated: January 26, 2009 05:42 EST
MotorCity Casino and Greektown saddled with debt, falling revenues; investors making demands
1.25.09
MotorCity, Greektown deal with bad hands of debt
By Chad Halcom and Nancy Kaffer
Two Detroit casinos are rolling snake eyes in the debt market.
A top ratings service downgraded its outlook for MotorCity Casino's parent company, citing a host of financial concerns. Greektown Holdings L.L.C. has until the end of this week to submit a reorganization plan that can resolve its swelling debts without need for a sale.
An agreement entered in U.S. Bankruptcy Court last month between the troubled Greektown Casino owners and its creditors gives the parties until Feb. 1 to submit a “co-exclusive” plan to restructure and settle its debts.
In other words, if the casino company doesn't submit a plan — with the consent of as many bondholders and other litigants as possible — by the deadline, creditors can submit restructuring plans of their own.
The Detroit City Council expects to meet today in a closed session with its Law Department and Chicago-based law firm Shefsky & Froelich Ltd. to review confidential new documents in the ongoing bankruptcy case, in which Detroit is a party.
A deputy press secretary for Detroit Mayor Ken Cockrel Jr. said he believes Greektown will submit a plan by week's end, but an attorney for the casino's creditors said there it might be “difficult” to craft a complete plan with all parties' consent by the deadline.
As late as last week, involved parties were discussing the shape of a reorganization plan, said Robert Gordon of Detroit-based Clark Hill P.L.C. and attorney for Greektown's unsecured creditors' committee.
Greektown, majority-owned by the Sault Ste. Marie Tribe of Chippewa Indians, and the creditors have also had to discuss a few preliminary offers to buy the casino and its assets, which came in earlier this month as part of the proceedings, Gordon said.
“There still has to be some digestion of the proposals that have come in,” he said. “That's why I think there's going to be some possible difficulty or delay in crafting a full plan before the deadline.”
Marian Ilitch-owned MotorCity's fiscal woes were enumerated in a statement posted on Moody's Investors Services' Web site, announcing the downgrade of parent company CCM Merger Inc.'s outlook to negative.
Last fall, CCM owners contributed $25 million in cash equity to enable the business to meet its September debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio. Moody's analysts warn that another equity infusion might be required for CCM to meet its year-end debt-to-EBITDA ratio.
CCM's debt limit is currently seven times EBITDA, according to Moody's, but that ratio could increase in 2009 because of a drop in gaming revenue — down 11 percent in December — that could offset earnings from the casino's expansion and lead to negative cash flow.
CCM's owners would have to ask to amend its lending covenants to increase its debt-to-EBITDA ratio or risk becoming noncompliant, according to Moody's.
Greektown may have its work cut out in proving it can resolve debts as it faces falling revenue and lost market share. A 2008 revenue and tax collection report prepared by the Michigan Gaming Control Board shows that revenue fell for all three casinos in December, with Greektown's dropping 12 percent.
MotorCity ended 2008 with $464 million in revenue, compared with $480 million in 2007. Greektown finished with $316 million compared with $341 million last year.
“Nothing before us suggests the industry isn't still solvent. The casinos as a whole showed 1.8 percent revenue growth over the previous year,” said Rick Kalm, the Gaming Control Board's executive director.
Edward Gudeman, president and managing partner of bankruptcy law firm Weik & Associates P.C. in Royal Oak, said Greektown's ability to control its own future likely comes down to showing an ability to make a profit on operations — exclusive of debt.
“If they can't show that in the plan, or the plan fails to execute, the case could be converted to Chapter 7 and be forced to sell,” he said.
Greektown sought bankruptcy protection in May, citing at least $243 million in unsecured debt to 40 unsecured creditors, and has since gained regulatory approval from the Gaming Board to borrow another $100 million more.
A new hotel is expected to open in a newly built tower along Monroe Street next month.
Chad Halcom: (313) 446-6796, chalcom@crain.com
Nancy Kaffer: (313) 446-0412, nkaffer@crain.com
By Chad Halcom and Nancy Kaffer
Two Detroit casinos are rolling snake eyes in the debt market.
A top ratings service downgraded its outlook for MotorCity Casino's parent company, citing a host of financial concerns. Greektown Holdings L.L.C. has until the end of this week to submit a reorganization plan that can resolve its swelling debts without need for a sale.
An agreement entered in U.S. Bankruptcy Court last month between the troubled Greektown Casino owners and its creditors gives the parties until Feb. 1 to submit a “co-exclusive” plan to restructure and settle its debts.
In other words, if the casino company doesn't submit a plan — with the consent of as many bondholders and other litigants as possible — by the deadline, creditors can submit restructuring plans of their own.
The Detroit City Council expects to meet today in a closed session with its Law Department and Chicago-based law firm Shefsky & Froelich Ltd. to review confidential new documents in the ongoing bankruptcy case, in which Detroit is a party.
A deputy press secretary for Detroit Mayor Ken Cockrel Jr. said he believes Greektown will submit a plan by week's end, but an attorney for the casino's creditors said there it might be “difficult” to craft a complete plan with all parties' consent by the deadline.
As late as last week, involved parties were discussing the shape of a reorganization plan, said Robert Gordon of Detroit-based Clark Hill P.L.C. and attorney for Greektown's unsecured creditors' committee.
Greektown, majority-owned by the Sault Ste. Marie Tribe of Chippewa Indians, and the creditors have also had to discuss a few preliminary offers to buy the casino and its assets, which came in earlier this month as part of the proceedings, Gordon said.
“There still has to be some digestion of the proposals that have come in,” he said. “That's why I think there's going to be some possible difficulty or delay in crafting a full plan before the deadline.”
Marian Ilitch-owned MotorCity's fiscal woes were enumerated in a statement posted on Moody's Investors Services' Web site, announcing the downgrade of parent company CCM Merger Inc.'s outlook to negative.
Last fall, CCM owners contributed $25 million in cash equity to enable the business to meet its September debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio. Moody's analysts warn that another equity infusion might be required for CCM to meet its year-end debt-to-EBITDA ratio.
CCM's debt limit is currently seven times EBITDA, according to Moody's, but that ratio could increase in 2009 because of a drop in gaming revenue — down 11 percent in December — that could offset earnings from the casino's expansion and lead to negative cash flow.
CCM's owners would have to ask to amend its lending covenants to increase its debt-to-EBITDA ratio or risk becoming noncompliant, according to Moody's.
Greektown may have its work cut out in proving it can resolve debts as it faces falling revenue and lost market share. A 2008 revenue and tax collection report prepared by the Michigan Gaming Control Board shows that revenue fell for all three casinos in December, with Greektown's dropping 12 percent.
MotorCity ended 2008 with $464 million in revenue, compared with $480 million in 2007. Greektown finished with $316 million compared with $341 million last year.
“Nothing before us suggests the industry isn't still solvent. The casinos as a whole showed 1.8 percent revenue growth over the previous year,” said Rick Kalm, the Gaming Control Board's executive director.
Edward Gudeman, president and managing partner of bankruptcy law firm Weik & Associates P.C. in Royal Oak, said Greektown's ability to control its own future likely comes down to showing an ability to make a profit on operations — exclusive of debt.
“If they can't show that in the plan, or the plan fails to execute, the case could be converted to Chapter 7 and be forced to sell,” he said.
Greektown sought bankruptcy protection in May, citing at least $243 million in unsecured debt to 40 unsecured creditors, and has since gained regulatory approval from the Gaming Board to borrow another $100 million more.
A new hotel is expected to open in a newly built tower along Monroe Street next month.
Chad Halcom: (313) 446-6796, chalcom@crain.com
Nancy Kaffer: (313) 446-0412, nkaffer@crain.com
Sunday, January 25, 2009
Desperate to attract guests; MotorCity Casino throwing in Red Wings tickets, transportation
According to the Website gadling.com, MotorCity Casino is giving away Detroit Red Wings tickets in travel packages designed to entice guests to stay at the one-year-old 400-room MotorCity Casino Hotel:
During a recent six-week period, Moody's twice downgraded the credit ratings for Ilitch-owned CCM Merger, Inc., a parent of MotorCity Casino. In 2005, Ilitch financed the acquisition as well as renovation/expansion of MotorCity Casino through borrowing/offerings totalling at least $1 billion. The new credit rating, "Caa," implies investments in the casino parent are now "judged to be of poor standing and are subject to very high default risk."
In September 2008, Ilitch injected $25 million in cash into the casino venture to escape a violation of lending covenants (debt-to-EBTIDA ratios). But at the end of 2008, when 4th quarter disclosures were made, it was revealed CCM Merger had violated those loan covenants. As a remedy, Ilitch is seeking to amend those lending covenants, loosening the debt-to-EBTIDA ratios -- apparently higher now than it was during the $300 million construction project. However, investors are demanding Ilitch inject further cash into the casino company and oppose amending the loan covenants.
Revenues reported by MotorCity Casino in 2008 were the lowest reported since 2005 -- before the gambling hall was expanded and a 400-room hotel addition was complete. And in December 2008 alone, MotorCity Casino's revenues fell 11.5%.
MotorCity Casino Hotel: Detroit Red Wings Package
And an article published on 1.25.09 in the Columbus Dispatch confirms the Red Wings ticket give-away too:Detroit's Greektown and MotorCity Casino are not doing as well as last year. Either are Indiana's. This is the time to look to these places for vacation deals. At MotorCity Casino there are overnight packages that include a variety of perks like food credit and Red Wing hockey game tickets.
Michael Ilitch and his wife Marian are owners of the Stanley Cup winning Detroit Red Wings NHL franchise and their company Olympia Entertainment retains the management contract for Joe Louis Arena. Marian Ilitch is the owner of Detroit's struggling MotorCity Casino. Ilitch Holdings, Inc. is the umbrella company for all Ilitch owned enterprises. Among other companies in the Ilitch Holdings family are also the Detroit Tigers and Little Casesar Enterprises, Inc.
You know the economy is in bad shape when Americans stop gambling.
Like just about every other industry, casinos have taken a big hit recently...
Detroit's Greektown Casino filed for bankruptcy protection in the spring. Revenue was down more than 7 percent at the casino last year. Revenue was also down at Detroit's MotorCity Casino by more than 3 percent in 2008...
MotorCity Casino in Detroit is offering several overnight room packages for $149 with a $50 food credit, $159 with two $30 gaming vouchers or $179 with two tickets to a Red Wings hockey game, including a shuttle to Joe Louis Arena...
During a recent six-week period, Moody's twice downgraded the credit ratings for Ilitch-owned CCM Merger, Inc., a parent of MotorCity Casino. In 2005, Ilitch financed the acquisition as well as renovation/expansion of MotorCity Casino through borrowing/offerings totalling at least $1 billion. The new credit rating, "Caa," implies investments in the casino parent are now "judged to be of poor standing and are subject to very high default risk."
In September 2008, Ilitch injected $25 million in cash into the casino venture to escape a violation of lending covenants (debt-to-EBTIDA ratios). But at the end of 2008, when 4th quarter disclosures were made, it was revealed CCM Merger had violated those loan covenants. As a remedy, Ilitch is seeking to amend those lending covenants, loosening the debt-to-EBTIDA ratios -- apparently higher now than it was during the $300 million construction project. However, investors are demanding Ilitch inject further cash into the casino company and oppose amending the loan covenants.
Revenues reported by MotorCity Casino in 2008 were the lowest reported since 2005 -- before the gambling hall was expanded and a 400-room hotel addition was complete. And in December 2008 alone, MotorCity Casino's revenues fell 11.5%.
MotorCity Casino Hotel: Detroit Red Wings Package
Friday, January 23, 2009
MotorCity Casino had worst year since 2005 -- despite larger gambing hall and new 400-room luxury hotel
According to the Michigan Gambling Control Board, annual revenues reported by MotorCity Casino for 2008 were the lowest realized by the Ilitch-owned casino since 2005; even though construction on MotorCity Casino's $300 million renovation/expansion project was in full swing during 2006 & 2007.
On 1.16.09, Moody's downgraded the credit ratings of MotorCity Casino's parent (CCM Merger, Inc.) for the second time in a six week period.
CCM Merger, Inc.. is seeking to amend loan convenants to allow for even higher debt ratios despite telling investors originally that such ratios would be lower after construction was completed. As of 12.31.08, CCM Merger will be in violation of the existing convenant absent this amendment.
Investors are rejecting the idea of amendment convenants and instead have called for the casino's owner, Marian Ilitch to inject more cash into the Casino.
Crain's Detroit Business has reported that Ilitch was already forced to inject $25 million into the casino in September 2008 in order to avoid being in violation of loan covenants at the end of the 3rd Quarter.
- On 11.30.05, MotorCity Casino broke ground on construction.
- The casino expanded its gambling floor by a third and unveiled 100,000 square feet of updated gaming space to the public on 6.07.07.
- A 400-room luxury hotel addition opened to the public on 11.29.07.
Nevertheless, post construction revenues don't reflect the larger entertainment complex.
On 1.16.09, Moody's downgraded the credit ratings of MotorCity Casino's parent (CCM Merger, Inc.) for the second time in a six week period.
CCM Merger, Inc.. is seeking to amend loan convenants to allow for even higher debt ratios despite telling investors originally that such ratios would be lower after construction was completed. As of 12.31.08, CCM Merger will be in violation of the existing convenant absent this amendment.
Investors are rejecting the idea of amendment convenants and instead have called for the casino's owner, Marian Ilitch to inject more cash into the Casino.
Crain's Detroit Business has reported that Ilitch was already forced to inject $25 million into the casino in September 2008 in order to avoid being in violation of loan covenants at the end of the 3rd Quarter.
Lowered credit rating may make it more difficult for Ilitch owned casino to raise cash
1.23.09
GAMING: Bond rating lowered
Moody's credit rating agency has downgraded the bond rating of MotorCity Casino's parent company, CCM Merger Inc., potentially making it more difficult for the casino and hotel owned by Marian Ilitch to raise cash.
Jacci Woods, a spokeswoman for the casino, said Thursday she could only say that CCM Merger was negotiating changes to its credit agreements to bring the terms that were set in 2005 "to levels consistent with those of other gaming operations in the United States."
The difficult economy has cut into casino revenues.
Motor City ended 2008 with $465 million in annual revenue, down from $480 million the year before.
Marian Ilitch, the wife of pizza-sports-entertainment mogul Mike Ilitch, is the sole owner of CCM Merger.
Jacci Woods, a spokeswoman for the casino, said Thursday she could only say that CCM Merger was negotiating changes to its credit agreements to bring the terms that were set in 2005 "to levels consistent with those of other gaming operations in the United States."
The difficult economy has cut into casino revenues.
Motor City ended 2008 with $465 million in annual revenue, down from $480 million the year before.
Marian Ilitch, the wife of pizza-sports-entertainment mogul Mike Ilitch, is the sole owner of CCM Merger.
Thursday, January 22, 2009
MotorCity Casino Owner Violates Convenants, Downgraded
Downgrades
MotorCity Casino Violates Loan Covenants, Downgraded
MotorCity Casino Violates Loan Covenants, Downgraded
By Bill Rochelle
CCM Merger Inc., the indirect owner of the MotorCity Casino in Detroit, received a second downgrade inside six weeks from Moody’s Investors Service on Jan. 16 following the announcement it needs an amendment to a loan covenant for the Dec. 31 quarter.
The busted covenant resulted from gaming revenue that declined 11 percent in December.
Moody’s conjectured that CCM may need for cash to be invested by the owner before it lands a covenant amendment.
The $300 million in senior unsecured notes went down to Caa3. Both ratings were down one level.
Net revenue for 12 months ended in December was $480 million, Moody’s said.
A competing casino in Detroit, Greektown Holdings LLC, has been in Chapter 11 reorganization since May. Greektown is owned by a tribe of the Chippewa Indians.
Ratings Action: Moody's downgrades CCM Merger to Caa1 from B3; negative outlook
Ilitch Casino's credit downgraded again; $50M bond payment coming due; may need to raise cash
1.22.09
MotorCity credit rating downgraded, may need to raise cash
By Nancy Kaffer
January has brought a slate of bad news for CCM Merger Inc., the financial entity that serves as parent company to MotorCity Casino, owned by Marian Ilitch.
Moody’s Investors Services has downgraded CCM’s credit rating for the second time in two months, questioning the company’s ability to meet its year-end debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio without amending its credit agreements.
For those amendments to happen, a statement on Moody’s Web site said, CCM’s owners might need to throw in more equity.
Depressed gaming revenues — down 11 percent in December — could offset incremental earnings from the completion of the casino’s expansion and the subsequent cessation of significant capital spending, according to the Moody’s statement. This could result in negative cash flow in 2009 and an increased debt-to-EBITDA ratio, currently at a debt limit of about seven times CCM’s EBITDA.
Those concerns come on the heels of a $25 million cash equity contribution made in September, necessary for CCM to meet its Sept. 30 debt-to-EBITDA covenant.
CCM’s negative rating outlook will affect about $1 billion in rated debt, according to a statement on Moody’s Web site.
The downgrade was prompted in part, according to the statement, by a CCM disclosure that it will need to seek such amendments from its bank lending group in order to comply with its bank loan leverage covenant for the fiscal year ended Dec. 31.
The statement noted that a $50 million Economic Development Corporation bond matures in May.
MotorCity ended 2008 with $464 million in revenue, according to the Michigan Gaming Control Board, and controls 33 percent of Detroit’s gaming market.
By Nancy Kaffer
January has brought a slate of bad news for CCM Merger Inc., the financial entity that serves as parent company to MotorCity Casino, owned by Marian Ilitch.
Moody’s Investors Services has downgraded CCM’s credit rating for the second time in two months, questioning the company’s ability to meet its year-end debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio without amending its credit agreements.
For those amendments to happen, a statement on Moody’s Web site said, CCM’s owners might need to throw in more equity.Depressed gaming revenues — down 11 percent in December — could offset incremental earnings from the completion of the casino’s expansion and the subsequent cessation of significant capital spending, according to the Moody’s statement. This could result in negative cash flow in 2009 and an increased debt-to-EBITDA ratio, currently at a debt limit of about seven times CCM’s EBITDA.
Those concerns come on the heels of a $25 million cash equity contribution made in September, necessary for CCM to meet its Sept. 30 debt-to-EBITDA covenant.
CCM’s negative rating outlook will affect about $1 billion in rated debt, according to a statement on Moody’s Web site.
The downgrade was prompted in part, according to the statement, by a CCM disclosure that it will need to seek such amendments from its bank lending group in order to comply with its bank loan leverage covenant for the fiscal year ended Dec. 31.
The statement noted that a $50 million Economic Development Corporation bond matures in May.
MotorCity ended 2008 with $464 million in revenue, according to the Michigan Gaming Control Board, and controls 33 percent of Detroit’s gaming market.
Wednesday, January 21, 2009
Ilitch-owned Casino enterprise takes another credit rating hit; carrying very high default risk
On 1.16.09, Moody's dropped its credit rating for CCM Merger, Inc. a parent of Detroit's MotorCity Casino to "Caa1" from "B3." That was the second time in two months that Moody's knocked down the casino's credit score.
Here's how Moody's defines a "Caa" rating:
"Obligors rated Caa are judged to be of poor standing and are subject to very high default risk."MotorCity Casino is carrying $1 billion of debt and a 7:1 Debt-to-EBITDA ratio; dangerously close to breaking lending convenants. Last week "investors" called on Mrs. Marian Ilitch, the casino's owner, to inject her own cash into the gambling establishment but instead Ilitch is seeking to lift various of its lending convenants.
It's also Moody's opinion that an additional equity contribution by CCM's owner may be needed in order for the company to obtain the required amendments. A $25 million contribution by CCM's owners of cash equity to repay debt was made in September 2008 that helped CCM meet its September 30, 2008 debt/EBITDA covenant.
Moody's downgrades MotorCity Casino's Credit Ratings for the second time in two months
Rating Action: CCM Merger, Inc.
Moody's downgrades CCM Merger to Caa1 from B3; negative outlook
Approximately $1 Billion of Rated Debt Affected.
New York, January 16, 2009 -- Moody's Investors Service today lowered CCM Merger, Inc.'s ("CCM") ratings in response to the company's recent disclosure that it will need to seek an amendment from its bank lending group in order to maintain compliance with its bank loan leverage covenant for the fiscal year ended December 31, 2008. The rating outlook is negative.
The following ratings were lowered:
- Corporate Family Rating to Caa1 from B3
- Probability of Default Rating to Caa1 from B3
- $100 million 1st lien revolver expiring 2010 to B3 (LGD3, 34%) from B2 (LGD3, 34%)
- $606 million 1st lien term loan B due 2012 to B3 (LGD3, 34%) from B2 (LGD3, 34%)
- $300 million 8% senior unsecured notes due 2013 to Caa3 (LGD5, 87%) from Caa2 (LGD5, 87%)
Moody's also believes the large decline in December 2008 monthly gaming revenues suggests that the pressure on earnings from weakened economic conditions has increased further. This heightened earnings pressure could more than offset the expected benefit to free cash flow in 2009 from the incremental earnings generated by the expansion and from substantially lower capital spending. As a consequence, free cash flow could be negative in 2009 and debt/EBITDA -- currently at about 7 times -- could increase further.
The negative outlook considers the uncertainty with regard to CCM's ability to obtain waivers and/or amendments and maintain access to its revolver availability. This availability will be needed to satisfy the May 2009 maturity of a $50 million Economic Development Corporation (EDC) bond. The negative outlook also incorporates Moody's opinion that an additional equity contribution by CCM's owner may be needed in order for the company to obtain the required amendments. A $25 million contribution by CCM's owners of cash equity to repay debt was made in September 2008 that helped CCM meet its September 30, 2008 debt/EBITDA covenant.
Ratings would likely be lowered if CCM is unable to obtain acceptable amendments or waivers from its lenders. The rating outlook could be revised to stable if covenant compliance issues are resolved in a manner that results in a sustainable capital structure and covenant compliance going forward.
Moody's last rating action for CCM was on December 4, 2008, when the company's corporate family rating was lowered to B3 from B2 and a negative rating outlook was assigned.
The principal methodology used in rating CCM was Moody's Global Gaming Methodology, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the rating Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Credit Policy & Methodologies directory.
CCM Merger, Inc. indirectly owns and operates the MotorCity Casino in Detroit, Michigan. The company generated net revenue of about $480 million for the fiscal year ended December 31, 2008.
New York
Keith Foley
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Andris G. Kalnins
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Tuesday, December 16, 2008
Gaming industry projected to face significant pressure in 2009; recovery unlikely until 2010
PRESS RELEASE
Fitch: U.S. Gaming Industry Recovery Unlikely Until 2010
NEW YORK, Dec 16, 2008 (BUSINESS WIRE) -- Following one of its most challenging years in recent history, the U.S. gaming industry will remain under significant pressure in 2009, with a recovery unlikely until 2010, according to Fitch Ratings...
Fitch believes that a prolonged U.S. recession that extends beyond 2009 and into 2010, coupled with an extremely tight credit environment, will put significant additional pressure on the balance sheets of already stressed corporate gaming operators. There was a significant tick up in high yield (HY) gaming defaults in 2008, with five issuers (French Lick, Tropicana, Greektown, Herbst, and Majestic Star) defaulting on $2.3 billion of HY market principal through November 2008. Three other issuers (Trump, Station, and Harrah's) are on the cusp of defaulting on debt obligations.
Fitch: U.S. Gaming Industry Recovery Unlikely Until 2010
NEW YORK, Dec 16, 2008 (BUSINESS WIRE) -- Following one of its most challenging years in recent history, the U.S. gaming industry will remain under significant pressure in 2009, with a recovery unlikely until 2010, according to Fitch Ratings...
...The gaming industry experienced a greater impact from the difficult financial conditions for consumers in 2008 than many investors expected. Generally, gaming spend per visit has been affected more than visitation levels, which can be bolstered by promotions. Considering the combined effect of recent declines in gas prices, and reductions in airline capacity and international demand, Fitch believes regional/local markets will fare better than destination markets, such as the Las Vegas Strip...
2009 Credit Outlook
Fitch believes that a prolonged U.S. recession that extends beyond 2009 and into 2010, coupled with an extremely tight credit environment, will put significant additional pressure on the balance sheets of already stressed corporate gaming operators. There was a significant tick up in high yield (HY) gaming defaults in 2008, with five issuers (French Lick, Tropicana, Greektown, Herbst, and Majestic Star) defaulting on $2.3 billion of HY market principal through November 2008. Three other issuers (Trump, Station, and Harrah's) are on the cusp of defaulting on debt obligations.
The weak fundamental trends combined with generally high leverage and tight liquidity provides the basis for Fitch's negative outlook on corporate gaming operators in terms of both operating fundamentals and credit ratings. While Native American gaming operators are feeling similar pressure on operating trends, the issuers in Fitch's rated portfolio generally maintain more conservative financial profiles relative to rating levels, so those issuers will have somewhat more ability to maintain ratings in 2009. Due to more stable free cash flow profiles, stronger internally generated liquidity positions, a less capital intensive business model, and more conservative balance sheet management, gaming suppliers have the most attractive overall credit profiles and greatest ability to weather the downturn... (Complete Analysis)
Wednesday, December 10, 2008
Expanded MotorCity Casino Hotel bringing in less revenue
According to an article published 12.10.08 in the Detroit News:
On 12.05.08 both Standard & Poor's and Moody's lowered the credit ratings of and raised default concerns related to Ilitch-owned CCM Merger, Inc., the parent of Detroit Entertainment LLC, which does business as MotorCity Casino. Both ratings firms placed CCM Merger on Negative watch lists.
- "Year-to-date casino revenues are up for Detroit's gaming market as a whole, but only because of large gains at MGM Grand; both MotorCity and Greektown are taking in less revenue this year than they did in 2007." (Complete Story)
On 12.05.08 both Standard & Poor's and Moody's lowered the credit ratings of and raised default concerns related to Ilitch-owned CCM Merger, Inc., the parent of Detroit Entertainment LLC, which does business as MotorCity Casino. Both ratings firms placed CCM Merger on Negative watch lists.
Tuesday, December 09, 2008
Moody's dowgrades ratings and default probably, gives negative outlook to MotorCity Casino parent CCM Merger
12.05.08 CASINOS: MotorCity owner rating cut
CCM Merger Inc., which owns the MotorCity Casino in Detroit, had its credit rating lowered by Moody's Investors Service because of its earnings outlook and concerns over meeting loan conditions amid the U.S. recession.
Moody's cut its debt rating and default probability to B3 from B2, with a negative outlook. The change affects about $956 million in debt.
The ratings change comes as the company faces "continued weakness in overall consumer spending and gaming demand trends as well as the additional pressure on the southeastern Michigan economy from the current challenges faced by the three major U.S. automobile manufacturers," Moody's said Thursday in a statement.
CCM Merger Inc., which owns the MotorCity Casino in Detroit, had its credit rating lowered by Moody's Investors Service because of its earnings outlook and concerns over meeting loan conditions amid the U.S. recession.
Moody's cut its debt rating and default probability to B3 from B2, with a negative outlook. The change affects about $956 million in debt.
The ratings change comes as the company faces "continued weakness in overall consumer spending and gaming demand trends as well as the additional pressure on the southeastern Michigan economy from the current challenges faced by the three major U.S. automobile manufacturers," Moody's said Thursday in a statement.
See post at Detroit News
Sunday, September 21, 2008
UPDATED: Analysts have reason to keep a close watch on MotorCity Casino (CCM Merger, Inc.) right now
Give these kinds of circumstances, you can bet analysts at Moody's as well as Standard & Poor's are keeping a close watch on MotorCity Casino's parent company, CCM Merger, Inc -- the entity Marian Ilitch formed to acquire MotorCity Casino from MGM Mirage/Mandalay Resort Group and other minor investors in 2005. In late August, Moody's reaffirmed its negative credit rating outlook for CCM Merger.
- Ilitch -- falls on Forbes' list of "400 Richest Americans" for second year in a row. Forbes' attributes the fall to troubles at MotorCity Casino which is "facing new competition from MGM Mirage" as well as an "economic downturn depressing casino valuations."
- MotorCity Casino (MCC) -- MGCB reports indicate revenues for Summer 2008 (Jun - Aug) fell 6.5% over Summer 2007.
- MotorCity Casino (MCC) -- revenues at the new and improved MotorCity Casino through August 2008 were down 1.65% over the previous 12 month period. (MGCB)
- MotorCity Casino (MCC) -- completion of what's now reported as a $300 million construction project was celebrated in September 2008 nearly a year after construction was originally anticipated to be complete.
- MotorCity Casino (MCC) -- construction, originally set to be completed by end of 2007, was ongoing through March 2008.
- MotorCity Casino (MCC) -- An expanded (25% larger) gaming floor opened in June 207 and despite an initial bump in revenues in June and July 2007; for each of the subsequent three months, revenues declined. Revenues posted in October 2007 were second lowest in that calendar year.
- MotorCity Casino (MCC) -- hotel opening delayed.
- MotorCity Casino (MCC) – August 2007 revenues were down as compared to the prior month; just two months after opening its expanded gaming floor.
- Detroit -- labor authorizes strike against three Detroit Casinos beginning Tuesday, Oct. 16. MotorCity Casino is labor's first target among Detroit casinos. On Oct. 17, MotorCity Casino locks its doors to gambling patrons.
- Detroit – realized a short-run UAW strike against GM in September.
- Detroit - UAW workers walked off the production lines at Chrysler in October.
- Detroit – second highest foreclosure rate in the Country. CNN’s Money.com reports that this past year, one of every 29 Detroit area households recorded a foreclosure filing there, almost double the rate of a year ago.
- Michigan – faced the possible shutdown of Detroit’s Casinos in the event of an anticipated Oct. 1 state government shut down.
- MGM Grand Detroit -- will celebrate a Grand Opening of its new $775 million casino hotel the Week of October 2, 2007.
- MotorCity Casino -- 400-room hotel is set to open in November completing the property’s $275 million renovation and expansion; MotorCity Casino announced the hiring of a V.P. for hotel operations in July who mysteriously has come and gone from the yet to open property; and MCC announced the hiring of a second V.P. for hotel operations in September.
- MotorCity Casino – lost its head chef in September to a restaurant in Chicago.
- MotorCity Casino – trying to gain some local marketing advantage by developing some synergy with other Ilitch-owned brands – namely the Detroit Red Wings and Detroit Tigers. MLB has a ban on mixing gambling and baseball; and an announcement for a Red Wings’ gambling tournament scheduled to coincide with MotorCity Casinos grand re-opening was pulled from the NHL’s official Red Wings’ Web site in light of recent NHL gambling scandals.
- Ilitch - falls 55 spots on Forbes 400 List; MotorCity Casino credit ratings fell, Tigers fail to make playoffs, Red Wings fail to sellout
CCM Merger, Inc. is the entity which obtained nearly $1 billion from "investors" through traditional bank loans and junk bond offerings in 2005. Ilitch used $525 million to buyout MGM Mirage, projected $275 million to renovate and expand the casino property and the balance primarily to assist in financing the acquisition of the funds in the shortrun.
It should be noted that one year after Ilitch purchased MotorCity Casino, both Moody's and Standard & Poor's were forced to downgrade their credit ratings for the Ilitch-controlled CMM Merger, Inc. because the entity was leveraged beyond what investors were told originally that they might expect.
first posted 10.03.07
updated 10.10.07; 10.15.07, 10.17.07, 10.25.07, 11.21.07, 11.28.07, 9.15.08
Thursday, September 18, 2008
Ilitch drops to #301 on Forbes List; family's struggling Casino primary reason
Forbes magazine is out with its 2008 "400 Richest Americans" rankings. Detroit's Michael Ilitch dropped to #301 on this years list and Forbes estimates the combined net worth of Mike Ilitch's family at $1.6 billion which is unchanged over 2007.
The primary reason: Forbes reports that MotorCity Casino, technically owned 100% by Mrs. Marian Ilitch is "facing new competition from MGM Mirage" as well as an "economic downturn depressing casino valuations."
Ilitch Holdings, Inc. is the parent company of such privately held brands as Little Caesars Pizza, Detroit Tigers (MLB), Detroit Red Wings (NHL), MotorCity Casino, Detroit's Fox Theater. Other Ilitch owned-ventures manage many of Detroit's sports facilities and theater venues.
The Ilitch family is extremely guarded about releasing any detailed financial data for these entities.
MotorCity Casino, however, must publicly disclose its total monthly gross revenue figure to the Michigan Gaming Control Board (MGCB). Those figures are disclosed to the public regularly by the MGCB.
During the summer months (Jun - Aug), combined gross revenues at the gambling hall fell 6.5% over the same period in 2007; despite the additions of a 400-room luxury hotel (Fall 2007) and opening of an expanded gaming floor (June 2007).
MotorCity Casino is a d/b/a for Detroit Entertainment LLC which is owned entirely by another entity, CCM Merger Inc. Marian Ilitch reportedly assumed 100% control of MotorCity Casino in 2005 when she bought outstanding shares in the property from Mirage Resort Group (MRG) and various minor investors. Her buyout of MRG helped pave the way for the merger of MGM and MRG. Subsequently MGM Mirage built an entirely new $800 million casino resort in Detroit.
Since Marian Ilitch acquired control of MotorCity Casino, both Moody's and Standard & Poor's have been forced to put the casino's parent, CCM Merger, on negative watch and subsequently downgraded the entity's credit ratings. Ilitch has borrowed somewhere in the neighborhood of $1 billion from investors and creditors to acquire and remodel MotorCity Casino. Among other things, the credit ratings agencies site concerns that MotorCity Casino is leveraged beyond what investors were originally told to anticipate during the remodeling and construction phase.
Forbes: Michael Ilitch - ranked #301
Wednesday, August 27, 2008
Ilitch charitable foundations used to promote struggling gambling hall
Detroit's powerful Ilitch family is using its various affiliated charitable foundations to promote and possibly even generate revenue for the struggling Detroit casino owned by the family's matriarch.
According to a press release marketing the two-day festivities, on August 24 & 25, Ilitch Charities along with the Detroit Tigers Foundation and the Detroit Red Wings Foundation, hosted a Detroit area golf tournament which was preceded by a "Summer Soiree" preview party at Detroit's MotorCity Casino.
According to a press release marketing the two-day festivities, on August 24 & 25, Ilitch Charities along with the Detroit Tigers Foundation and the Detroit Red Wings Foundation, hosted a Detroit area golf tournament which was preceded by a "Summer Soiree" preview party at Detroit's MotorCity Casino.
The gambling hall is reportedly owned entirely by Mrs. Marian Ilitch. Family patriarch Patriarch Mike Ilitch owns the Detroit Tigers and along with Marian is co-owner of the Detroit Red Wings.
Christopher Ilitch, CEO of Ilitch Holdings and a member of MotorCity Casino's management committee, is the chairman of Ilitch Chairities and his wife Kelle is a director. David Agius, Christopher Ilitch's one-time executive assistant, is the President of Ilitch Charities. Patriarch Mike Ilitch owns the Detroit Tigers and along with Marian is co-owner of the Detroit Red Wings.
The Ilitch events were marketed as opportunities to play golf and mingle at MotorCity Casino with Hollywood celebrities as well as managers, players and coaches affiliated with the Ilitch owned Detroit Red Wings and Detroit Tigers.
The Ilitch family has been using its charitable foundations and other assets to promote and drive revenues to MotorCity Casino. Twice before the Detroit Red Wings Foundation and player from the NHL franchise have been used to promote poker tournaments at MotorCity Casino.
The Ilitch events were marketed as opportunities to play golf and mingle at MotorCity Casino with Hollywood celebrities as well as managers, players and coaches affiliated with the Ilitch owned Detroit Red Wings and Detroit Tigers.
The Ilitch family has been using its charitable foundations and other assets to promote and drive revenues to MotorCity Casino. Twice before the Detroit Red Wings Foundation and player from the NHL franchise have been used to promote poker tournaments at MotorCity Casino.
Major League Baseball (MLB) has strict prohibitions against gambling and casinos which apply to its players, managers, coaches and owners. The press release suggest those currently affiliated with the Tigers baseball team were partcipants at the MotorCity Casino party.
Even after spending more than $300,000 renovating and expanding MotorCity Casino, revenues at the Ilitch-owned gambling hall have been on the decline. Crain's Detroit reports that revenues at the Ilitch casino are down 1.5% over the previous 12 months and in July alone revenues took a 7.26% dive. In the last several years, Moody's and Standard & Poor's have downgraded the credit ratings for MotorCity Casino (aka CCM Merger, Inc.)
Even after spending more than $300,000 renovating and expanding MotorCity Casino, revenues at the Ilitch-owned gambling hall have been on the decline. Crain's Detroit reports that revenues at the Ilitch casino are down 1.5% over the previous 12 months and in July alone revenues took a 7.26% dive. In the last several years, Moody's and Standard & Poor's have downgraded the credit ratings for MotorCity Casino (aka CCM Merger, Inc.)
Tuesday, August 05, 2008
MotorCity Casino realizes 1.57 percent after betting on $300M expansion
According to a review of monthly casino revenues published by the Michigan Gaming Control Board (MGCB), average monthly gaming revenue at MotorCity Casino for the 12 months prior to the June 2007 opening of MCC's expanded gaming floor were $39,641,650.62.
In the 12 months since MotorCity opened its bigger gaming floor -- and then opening its new hotel -- average monthly revenues for Marian Ilitch's casino have been $40,264,844.87.
Increasing the gaming floor by 25% -- and adding a 400-room hotel to the property -- MotorCity Casino Hotel has realized a 1.57% increase in its monthly gaming revenues.
Can that be what investors expected?
It's been reported that Marian Ilitch borrowed $1 billion or more in order to acquire MotorCity Casino from MGM Mirage and then complete the expansion of the gaming floor, add the hotel, and cover the costs of debt service during the construction.
When the MotorCity Casino construction project started it was announced the project would cost $275 millon and would be completed by the end of 2007. The expansion project is still not complete and the Detroit Free Press has published construction costs at $300 million -- almost 10% higher.
During the last two years Moody's and Standard & Poor's have both downgraded credit ratings for CCM Merger, Inc., MotorCity Casino's parent company, because the casino's debt ratios had grown higher than originally anticipated during the construction period.
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