New Orleans casino advances slowly

Thursday, Sept. 3, 1998 | 11:22 a.m.

The casino could be ready to receive gamblers about a year after it emerges from federal bankruptcy court, a spokesman for Harrah's Entertainment Inc. said Wednesday.

The project's partners sought refuge in bankruptcy court in 1995 after closing their temporary gambling hall and haulting construction on the permanent site at the foot of New Orleans' Canal Street.

Currently, the Louisiana Gaming Control Board is awaiting the completion of background checks on the primary officers of Jazz Casino Corp., the new company that will own the project.

Harrah's Entertainment, which held majority interest in now-bankrupt Harrah's Jazz Co., will be a minority partner in Jazz Casino and will manage the project. Owners of $430 million in Harrah's Jazz junk bonds will hold majority interest.

"We're not really putting a projected opening date on it until it comes out of bankruptcy, although the expectation is within a year after that takes place," said Harrah's Entertainment spokesman Ralph Berry.

Berry said the project is working on a fall timetable for completing the bankruptcy court proceedings. After that, construction work will resume on the unfinished casino building at the edge of the French Quarter.

A late 1999 opening date would mean that more than seven years passed from the time the Legislature legalized the casino to the first time the permanent casino opens its doors to the public.

On Thursday, U.S. Bankruptcy Judge T.M. Brahney III will be asked to approve a financing change for the revived project. Harrah's Entertainment wants to provide $12.5 million of new financing, while guaranteeing a bank loan for another $12.5 million.

The money will be used in part for design changes and equipment enhancements to meet competition from other casinos, such as those on the Mississippi Gulf Coast, according to a disclosure statement filed in court.

Some industry analysts have said that large hotel-casino resorts on the coast will provide stiff competition for the New Orleans casino. The original project collapsed after New Orleans failed to meet Wall Street projections from the early 1990s of becoming a destination point for tourist-gamblers.

Harrah's Entertainment has agreed to forego interest payments on $40.1 million that the company has lent the project to keep it alive in bankruptcy. That will save the project about $5.5 million.

The construction cost of finishing the casino has risen from $129.4 million to $140.7 million, the disclosure statement said.

If Brahney approves, creditors will vote on the proposal, a process expected to take five to six weeks.