Casino has operating loss of $98 million

Monday, Jan. 8, 2001 | 3:30 a.m.

Although Kyle did not offer an opinion in his publicly released report Monday, the legislative auditor's office told Senate President John Hainkel last week that the figures show the casino cannot make a go of its operation.

Kyle, in a brief interview Monday, noted that his report was for a nine-month period. "If you annualize the debt, that $98 million loss becomes $130 million."

"Unless somewhere in a new structure of expenses, including payments to the state and to the City of New Orleans, they could come up with $130 million, they can't show a positive net income," he added.

Kyle said the casino operator and majority owner, JCC Holding Co., might be willing to operate at a loss for two or three years, thinking business will pick up.

Of the $557 million in debt, almost half is owed to Harrah's Entertainment, which is a minority partner in the casino. The largest single debt to Harrah's Entertainment is $148.8 million, a loan. The holding company is paying only the interest on that loan.

The bond holders of the venture are owed $205 million, making up the bulk of the remaining debt.

Harrah's Entertainment is the guarantor of the casino's $100 million annual tax to the state that is paid in daily amounts.

The report comes at a time when Gov. Mike Foster and legislative leaders are trying to find support among lawmakers to cut the $100 million tax. Without relief, JCC Holding Co., said it will close in March.

Harrah's Entertainment said it will no longer guarantee the tax payment to the state without a tax cut.

Foster could not be reached immediately for comment.

JCC Holding Co. already has gone to bankruptcy court to reorganize its debt and filings in the court indicate the company has $641.7 million in liabilities and $87 million in assets - figures that pretty much reflect those in Kyle's report.

Kyle's audit, requested by Foster, Hainkel and House Speaker Charlie DeWitt, is based on figures filed by the casino operator with the Securities and Exchange Commission and includes data for the nine-month period ending Sept. 30.