Casino sides hope to win governor’s support Tuesday

Monday, Nov. 3, 1997 | 2:58 a.m.

Although no one would discuss details about how the guarantee would work, two state lawmakers and two attorneys involved in trying to keep the project alive said they would ask Foster for public support of their proposal.

Without Foster's backing, it is likely that U.S. Bankruptcy Judge T.M. Brahney III will order the casino's owner, Harrah's Jazz Co., into liquidation on Wednesday, said Harrah's Jazz attorney William Patrick.

Harrah's Jazz has been in bankruptcy court since November 1995 after closing its temporary casino, which lasted less than seven months.

Industry analysts said the $850 million project collapsed after New Orleans failed to live up to Wall Street predictions as a guaranteed tourist spot for gamblers.

After nearly 18 months of negotiations, Harrah's Jazz presented a reorganization plan to the Legislature in June - without Foster's public backing. Lawmakers rejected it.

A prime concern at the time was how the state would get its minimum $100 million annual tax payment in case of a second failure.

That plan called for the state to be moved to the top of the creditors' list. After the legislative rejection, Foster said there would be no deal unless the tax payment was guaranteed absolutely.

The governor's office confirmed that Foster would meet Tuesday with Sen. Ken Hollis, R-Metairie, and Rep. Edward Murray, D-New Orleans, who are leading the casino drive in the Legislature, and representatives of the casino. The governor declined comment Monday.

Attorneys for Harrah's Jazz and the owners of $430 million in junk bonds in the project also confirmed the meeting, which they said they would attend.

Recent talks about the tax guarantee have involved the bondholders, as well as Harrah's Entertainment, the primary partner of Harrah's Jazz, and Bankers Trust, which once provided credit for the $850 million project.

Patrick and bondholders' attorney Rudy Cerone would not discuss how the guarantee was expected to work. Hollis and Murray said they did not know. All four said final details were being worked on Monday.

"The final details are being worked out today and if the governor agrees that his demands have been satisfied, then we hope he will agree that the state should honor its contract for the land-based casino," Patrick said.

Patrick said the plan also will provide interim financing to keep the project alive until necessary approvals are obtained from the Louisiana Gaming Control Board and the Legislature - provided that Foster backs the plan.

"The ball will be in the governor's court," Cerone said.

Asked what might make the difference if the Legislature gets a second chance to vote on a casino contract, Hollis said: "Very simple, Mike Foster."

Brahney's hearing on Wednesday was called to consider a motion by Harrah's Jazz's court-appointed bankruptcy trustee to liquidate the project - a move that would leave creditors with little, if anything, of what they are owed.

Unsecured creditors in the project are owed about $50 million.

In addition to Foster's support for a tax guarantee, Brahney also will have to be satisfied with temporary financing for the company to avoid liquidation, Patrick said. Harrah's Jazz must pay the city $732,000 per month for the site on which the unfinished casino sits, as well as attorneys' fees.

Brahney has said that he will not allow Harrah's Jazz to run a deficit while in bankruptcy protection.

Neither Hollis nor Murray would predict how quickly a Foster-backed deal could be considered by the Legislature.