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Restructuring
Centaur Gets Control over Indiana Racetrack and Casino

The agreement brings an end to a two-year process in that stalled in 2012

Centaur Gaming Inc. has purchased Indiana Grand Casino and Indiana Downs Racetrack.

The Indianapolis-based buyer took possession of the Shelbyville, Ind. casino and racing company after having satisfied requirements of the Indiana Horse Racing Commission.

The agreement brings an end to a two-year process in that stalled in 2012 after the commission mandated further review of Centaur’s finances as a condition of its approval.

The target’s parent company, Indianapolis Downs LLC, had been in bankruptcy court proceedings for more than a year until Oct. 31. Centaur was approved by the courts to buy the track and casino for $500 million.

Toronto private equity firm Clairvest Group Inc. invested $8.4 million in support of the Indiana Grand acquisition in the form of unsecured term loans with stapled warrants.

As part of this transaction, Centaur completed a financing which resulted in full repayment of its first and second lien loans.

When Indianapolis Downs filed Chapter 11 in April 2011, it listed assets of $500 million to $1 billion and between $100 million and $500 million in liabilities. “This filing is unlike many debt restructuring cases because Indianapolis Downs has steadily grown its revenue and market share since opening,” chief restructuring officer Gregory Rayburn said in a statement at the time.

According to court papers, the company’s total revenue for the calendar year 2010 was $270 million, representing an 8.7 percent increase from the previous year.

Indiana Downs Racetrack, about 25 miles from Indianapolis, opened in 2002, while Indiana Grand Casino began in 2008.

But, “despite the success of 2010, the debtors faced certain operational issues inherent in the early stages of a gaming facility and financial issues, primarily their ability to service the long-term debt incurred because of an initial $250 million state-mandated license fee and a high statutory tax rate,” Rayburn said in court papers.

Greenberg Traurig LLP was debtor counsel and Lazard acted as the company’s financial adviser. 

 

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