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February 4, 2013

Chickasaw affiliate no longer planning to buy Mississippi casinos

JACKSON, Miss. (AP) — An Oklahoma Indian tribe is no longer planning to spend $125 million to buy the bankrupt DiamondJacks casinos in Bossier City, La., and Vicksburg, Miss., from Legends Gaming.

Global Gaming Solutions, a unit of the Chickasaw Nation of Oklahoma, wrote in court papers filed Jan. 25 that the DiamondJacks operations had run further downhill since owner Legends Gaming filed for Chapter 11 bankruptcy reorganization in Shreveport, La., in July.

“To put it bluntly, the debtors’ business today is but a shell of what existed only a few short months ago, is not the business that Global Gaming agreed to purchase, and cannot generate the financial performance necessary to allow Global Gaming to comply with the covenants and requirements of the acquisition financing,” a lawyer for Global wrote.

Legends, based near Chicago, accuses Global of breaking its purchase contract. Even after an earlier bankruptcy, the company owes lenders $298 million, almost all in secured debt.

Global had planned to borrow nearly $100 million, in addition to a cash contribution of $27.5 million. But it says it can’t make the debt payments on that amount of money.

Global cited a report from casino consultant Randall Fine that said the casinos are losing their share of shrinking markets, that the larger Bossier City casino is threatened by the planned 2013 opening of the $197 million Margaritaville Casino Resort there and that the casinos are “extremely outdated” and in “woeful” condition.

Global also wrote in court papers that Legends had lied about its finances to the court.

“Apparently to the debtors, it was fine for them to disclose to the court and creditors false information through a disclosure statement, but a breach of contract for Global Gaming to provide true ‘actual’ information,” a lawyer for Global wrote.

William McEnery owns 92 percent of Legends shares. His Chicago-area gas station group — Gas City — was sold off in bankruptcy court in 2011. McEnery has been forced into personal bankruptcy as well.

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