Snake Eyes: Casino Bankruptcies

Transcription

1 Snake Eyes: Casino Bankruptcies CONCURRENT SESSION Duncan A. Pickett, Moderator Capstone Advisory Group, LLC; Washington, D.C. Michael J. Sellinger GLC Advisors & Co., LLC; New York Stanley B. Tarr Blank Rome LLP; Wilmington, Del. Jonathan M. Tibus Alvarez & Marsal; Atlanta 2015

2 Retrieve Asset Sales Information Asset Sales Databank The Key to 363 With 363: View by asset sales price, circuit, date and court Read summaries of key terms of recent asset sales Receive notification of new asset sales via or RSS Use it free as an ABI member Stay Current on Sales Trends 363.abi.org 66 Canal Center Plaza Suite 600 Alexandria, VA phone: abi.org Join our networks to expand yours: 2015 American Bankruptcy Institute All Rights Reserved.

3 American Bankruptcy Institute Gaming Restructuring Issues in Maturing Markets August

4 2015 Mid-Atlantic Bankruptcy Workshop Overview { Expansion of regional gaming is changing gaming restructurings: Atlantic City, NJ gross gaming revenue down 17.3% Tunica, MS gaming revenue down 2.8% Las Vegas down 1.1% Chicagoland down 5.7% Connecticut down 6.8% Florida market up 6.7% { This trend is likely to continue as municipal governments expand gaming (e.g., Massachusetts) to retain tax revenues exported to neighboring states. { Some still see gaming as the Panacea Cure Expansion talks about Gaming in Alabama. { Recent gaming restructurings now face with unprofitable operations. { Atlantic City s latest restructurings (Trump Taj Mahal, Trump Plaza, Revel, and Caesars) now include shuttered and mothballed properties and have raised challenging legal and financial issues. 2 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- $3,200 $3,150 $3,100 $3,050 $3,000 $2,950 $2,900 $2,850 $2,800 $2,750 $2,700 $2,650 NJ (Atlantic City) Gross Gaming Revenue (NJ Division of Gaming Enforcement) Mississippi Regional Gaming Revenue (Mississippi Gaming Commission) (in Millions) (in Millions) 236

5 American Bankruptcy Institute Recent Issues in Atlantic City Restructurings { Shuttered properties { Termination of Intangible Assets/Trademark and Licensing Agreements { CBA Rejection Issues { Dark Properties Carrying Costs Property Taxes Maintenance { Alternative Uses Revel and Taj: University/Condo Redevelopment Showboat as a college Senior Citizens Center Tunica: dark properties and sale as raw land Transfer of Gaming License 3 237

6 2015 Mid-Atlantic Bankruptcy Workshop Restructuring Challenges { Cash Collateral Strategies Hoarding Cage/Floor Cash { Securing DIP Financing in the wake of Revel { Management: CRO vs Operator { Operate as going concern vs. shutter { Licensing { External Management Companies and/or Marketing Consultants { Permanent vs. Temporary enhancements { CapEx 4 238

7 American Bankruptcy Institute Other Markets { Connecticut once a destination market is now a just a strong regional player. { Las Vegas remains the last true domestic destination market at it has not been as impacted by regional expansion { Approximately 50% of LV revenue is hospitality { Las Vegas and Las Vegas Locals Penn Gaming Just purchased Tropicana in Las Vegas. PG making a big splash first property on the strip. Airlines are expanding their runs in to Las Vegas Las Vegas Convention Authority recently purchased the Riviera Property { Caesars Operational Restructuring vs. Pure Debt Restructuring. { Nancy Rapport Professor at the University of Las Vegas Chairs the Fee Committee on Caesar s Bankruptcy { Kentucky Churchill Downs comes off record first quarter profits { North Jersey will adversely affect South NJ Remaining AC properties are performing better but is this temporary Diversity and driving non gaming opportunities in Atlantic City

8 2015 Mid-Atlantic Bankruptcy Workshop Future Opportunities { Tribal Without bankruptcy, Tribal restructurings will continue to be band-aids Require professionals with both municipal and gaming experience Tribe must retain equity position { Stand alone single operators in the regional markets { Professionals need to make meaningful operational improvements in negative cash flow situations Tax and Other Concessions from municipalities Union concessions Market infrastructure investments True profit share growth Cost reduction opportunities Effective deployment of CapEx { Identifying true top-performers in casino management is very challenging Many operators grew up in a build it and they will come industry. While this model still works in Las Vegas and at new regional properties, mature markets and facilities require nimble marketers. Watch out for Ginger the Chicken { Sources for cost/liquidity enhancements EDR Staff Cages Thin the floor Unprofitable promotions 6 240