PROVIDENCE – Gov. Donald L. Carcieri said this afternoon that Twin River’s parent company, which filed for bankruptcy protection today, has reached an agreement with his administration and its lenders on a restructuring plan.
The agreement calls for Twin River to remain open during the bankruptcy process, and the Rhode Island Lottery will authorize Twin River to remain open 24 hours a day, seven days a week, the governor’s office said.
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Twin River’s parent company, UTGR Inc., a subsidiary of BLB Investors LLC, has been weighed down by debt that now totals $589 million, according to court documents filed earlier today.
Under the plan, creditors would forgive about $290 million worth of UTGR’s debt in exchange for a change in management and ownership, which would be subject to state regulatory approval. BLB Investors is expected to continue to manage Twin River until October, the governor’s office said.
The creditors also have agreed to exchange “a large portion of their debt” for equity in the reorganized Twin River, according to the governor office.
In addition, the Carcieri administration has agreed to direct between $4 million and $10 million of its annual revenue from Twin River to supplement Twin River’s marketing budget.
The plan is contingent on the General Assembly voting to release the venue from the requirement that it continue its money-losing greyhound racing operation, according to the court filing. The Carcieri administration said it supports the change.
A spokesman for House Democratic leaders did not immediately return a call requesting comment.
The deal also must win approval from a federal bankruptcy judge and a majority of Twin River’s creditors. The governor’s office said the Carcieri administration “believes this consensual reorganization plan is the best possible plan and is in the best interest of all parties and the taxpayers of the state.”
In its court filing, attorneys for the company said: “In many respects, [Twin River’s operations] have been great successes.” They noted the venue’s expansion and said revenue has increased in each of the past few years.
The state has a major stake in Twin River’s future because gambling is Rhode Island’s third largest source of revenue. In a statement, Carcieri said he could “assure that my administration is doing everything necessary to protect the critical revenue source from Twin River.”
The governor also made a pitch to customers unsure about whether to return to the venue.
“The reorganization proceedings under Chapter 11 will not impact the gaming experience at Twin River,” Carcieri said. “It is business as usual at Twin River; the facility is open, offering patrons gaming, dining, and entertainment.”
The state keeps 61.5 cents of every dollar generated at Twin River after winnings have been paid out, the filing said, and the venue’s revenue cannot support its high tax rate and debt obligations. The Carcieri administration has agreed to oppose any effort to increase the state’s take from Twin River.
UTGR is a subsidiary of BLB Investors LLC, a Connecticut-based company that is a joint venture of Starwood Capital Group, Kerzner International Holdings and Waterford Group. In 2005, they paid $470 million to acquire the six-decade-old Lincoln Park, then spent $220 million on renovations that were completed in 2007.
Twin River’s owners have warned for months that they were nearing insolvency, but the governor broke off negotiations after 15 months and ruled out a state-financed rescue for the slot parlor.
“Time and time again, I stated from the beginning that a bailout of BLB was not an option,” Carcieri said today. “All parties heard us loud and clear, and the current proposal represents a substantial compromise on the part of the lenders and BLB that addresses the state’s concerns.”
Patti Doyle, a spokeswoman for Twin River, argued that the restructuring plan was the best possible outcome to the gaming facility’s financial troubles.
“We began the process of restructuring our finances more than one year ago with the hope that we would reach an agreement with our lenders and key constituencies that was in the best interest of all parties, chief among them, our patrons and the state of Rhode Island,” Doyle said in a statement. “Today’s consensual agreement does exactly that, and most important, does so in a way that guarantees little to no disruption to operations at Twin River.”
Gary Sasse, director of the R.I. Department of Revenue, added that the state government “will continue to exercise its long-standing oversight and control of the operations at Twin River” throughout the bankruptcy process.
UTGR is being represented by Allan M. Shine, a lawyer with the Providence law firm Winograd, Shine & Zacks P.C., and Paul M. Basta and Stephen E. Hessler, both of Kirkland & Ellis LLP, a firm based in New York City.
