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By MARGARITA BAUZA • FREE PRESS BUSINESS WRITER • October 8, 2008
Greektown Casino has hired an investment bank to seek out buyers for the bankrupt casino. A sale is one of the casino’s options for exiting Chapter 11, and the more likely option.
U.S. Bankruptcy Court Judge Walter Shapero was expected to file an order today appointing investment bank Moelis & Co. to seek out financing and potential buyers for Greektown.
Chuck Moore, senior managing director at the turnaround consulting firm Conway McKenzie & Dunleavy, which is leading Greektown through its bankruptcy, said a sale is the preferred option by most parties involved and will more than likely be the route sought.
The bank has offices in New York, Los Angeles and Boston, and specializes in restructurings, mergers and acquisitions.
A number of management changes also were announced at the casino board’s monthly meeting today. Greektown Casino CEO Craig Ghelfi announced his retirement, effective Oct. 31.
A new management board is being put in place for the casino.
The board will be reduced from 12 to five members, with four appointees being outside professionals with experience in gambling operations, business restructuring and management. The names will not be disclosed until background investigations are concluded by the state.
The casino announced those changes as it revealed it has missed operating targets for the past two months.
August’s projected revenue was $30.2 million but came in at $26.8 million. September’s projected revenue was $27.4 million but came in at $25.2 million.
The casino missed loan covenants in the bankruptcy financing loan agreement for the month of
August by $500,000. September numbers have not been completed.
Moore said revenue is down 40% at the Pantheon, the casino’s high-limit area, which has been temporarily moved and will reopen on the first floor by the end of November.
Moore said Greektown Casino is aiming to open 200 hotel rooms in January, weeks earlier than its targeted date of Feb. 12, in order to take advantage of the North American International Auto Show.
The casino owes $755 million to banks, bondholders, and former owners. The figure does not include investments by its current majority owner, the Sault Ste. Marie Tribe of Chippewa Indians, who have put $47 million into the operation in the past 10 months.
Also at today’s meeting, Rick Kalm announced that four restaurants are being dropped from the casino’s meal comps program as it investigates irregularities. The meal comps program was created as a way for casinos to help compensate local restaurants for the loss of regular business once casinos opened. The complimentary meal coupons are used to reward regular casino customers.
Holiday Inn Express voluntarily dropped out of the program. Sweet Georgia Brown, Laikon Cafe and Bahn Thai Café, all located in Greektown, were dropped for not providing information requested by the casino, such as tax records and receipts.
