French Lick Casino Headed To Bankruptcy?

Indiana gaming expert Ed Feigenbaum discusses the new French Lick casino's precarious financial situation in his latest edition of the Indiana Gaming Insight. He posts some of his disuscussion at the Indiana Daily Insight. Feigenbaum writes of a looming bankruptcy if things down turn around quickly for the casino:

Recall that the Indiana Gaming Commission first granted the Orange County Operating Agent contract to a subsidiary of Trump Entertainment, Inc. (or one of its assorted permutations), and as Trump proceeded through bankruptcy recovery, the Daniels Administration became concerned (even as Wall Street wasn't) about the company's financial ability to pull off the project.

Impatient with Trump, the Gaming Commission quickly switched gears and awarded the project to an Indiana consortium, which spent almost $400 million renovating the two grand hotels in great style and building a serviceable casino. But they have spent a considerable amount of time and resources in fighting assorted legal battles (some of which continue, despite a much-ballyhooed buyout of one partner by the other).

And we have kept readers informed of a little known matter: the financial solvency of the current Orange County team. While all of Indiana's publicly owned casinos are working on preparing their respective second quarter and mid-year 2007 results (which will be available in a period ranging from a few days to a few weeks, dependent upon the casino), the French Lick casino owners had yet to even release year-end 2006 numbers as of the time Thursday night when we went to press with the most recent issue of our gaming newsletter. They have received several waivers and extensions of time from the bondholders and those behind their line of credit, but those behind the revolving line of credit finally put their foot down and barred any further drawdowns from that revolver until they see the numbers.

The numbers are important because the financial covenants commit the OC team to meet certain EBITDA margins . . . and their has been some skepticism about whether those targets have been hit. And while our reports about the seriousness of the situation have gone largely unheeded -- much like our first in-depth report a few months ago about the looming property tax crisis in Marion County and elsewhere -- on Friday the French Lick partners released a financial report that indicates they are down to less than $10 million in cash . . . and could seek bankruptcy protection if they can't find additional financing shortly.

Recall that liquidity concerns on the part of the Governor's Office and Gaming Commission led them to dump Trump . . . even as Wall Street seemed to have had no such problem with Trump. While we tend not to get hysterical about things, we do like to pat ourselves on the back occasionally, and this is one of those times.