Hollywood Casino Shreveport faces request for examiner from Black Diamond affiliates

By Jeff Pines

Washington, Sept. 27 - Black Diamond Capital Management LLC asked the U.S. Bankruptcy Court for the Western District of Louisiana Friday to appoint an examiner for Hollywood Casino Shreveport to investigate the proposed sale of the company to Eldorado Resorts LLC.

It called Hollywood Casino Shreveport's proposed sale of its assets to Reno, Nev.-based Eldorado through a pre-packaged Chapter 11 "the product of a flawed insider-controlled prepetition sale process."

The proposal calls for Hollywood Casino Shreveport secured noteholders to exchange their $189 million of notes for $140 million of new first mortgage notes, $20 million of pay-in-kind preferred equity securities, a 25% non-voting equity interest in the reorganized company and a cash amount to be determined.

According to Black Diamond, the purchase agreement prohibits Hollywood Casino Shreveport from accepting higher bids.

The sale is the product of a collaboration among the casino company, TCW and American International Group, two other bondholders, Black Diamond said. AIG holds $64.7 million of Eldorado's 9% senior notes due 2014.

Because Black Diamond had signed a confidentialty agreement months ago, it was able to monitor the meetings and decided to bid on Hollywood Casino Shreveport. Black Diamond said its bid was "economically superior" to Eldorado's, but Fort Worth, Texas-based Hollywood Casino Shreveport rebuffed it. Black Diamond then offered to serve as stalking horse bidder, which the casino company also rejected, Black Diamond said.

Two Black Diamond affiliates, BDCM Opportunity Fund LP and Black Diamond CLO 2000-1 Ltd., are among Hollywood Casino Shreveport's largest creditors and petitioners, it said. Together, they hold more than $28 million in Hollywood Casino Shreveport bonds.

Black Diamond filed an involuntary bankruptcy petition for Hollywood Casino Shreveport on Sept. 10. The court is expected to rule on the petition next month.

Hollywood Casino Shreveport is an indirect subsidiary of Penn National Gaming Inc. Hollywood Casino Shreveport's Chapter 11 case number is 04-13259.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.