Vegas-based Majestic Star Casino seeks bankruptcy

By Steve Green

Monday, Nov. 23, 2009 | 8:51 a.m.

Las Vegas-based Majestic Star Casino LLC filed for bankruptcy protection today in Delaware after defaulting on debt obligations covering its properties in Colorado, Indiana and Mississippi.

Majestic Star is led by gaming executive Don Barden, who through another company controls Fitzgeralds hotel-casino in downtown Las Vegas. The Las Vegas property is not included in today's bankruptcy filings.

Majestic Star, struggling with its long-term debt load of $580 million and total liabilities of $771 million, has two riverboat casinos and a hotel in Gary, Ind.; a casino and hotel in Tunica, Miss.; and a casino in Black Hawk, Colo.

The company, which is in default on the $580 million in long-term debt obligations, filed for bankruptcy protection after talks on restructuring its debt failed to yield an agreement and certain lenders threatened to foreclose on the company's properties.

For the quarter ended June 30, Majestic Star lost $10.3 million on net revenue of $75.9 million as the recession reduced business at its properties. For the same quarter of 2008, the company lost $8.2 million on net revenue of $85.3 million.

"Debtors commenced these cases to preserve their businesses, operations and going concern value while they continue to negotiate a consensual balance sheet restructuring with their principal creditor constituencies," Jon Bennett, senior vice president and chief financial officer, said in a court filing today. "Notwithstanding challenges posed by the recent economic downturn and increased competition in the markets in which they compete, the debtors' businesses and operations continue to perform well and, excluding debt service, produce cash flow sufficient to support their ongoing operations. The debtors are confident that they will be able to reach consensus with a majority of their creditors regarding a new capital structure and debt service load that more appropriately reflect the debtors' revenues, and which will position the debtors to emerge from these cases as a financially healthy and stable organization."

Employing 2,600 people, Majestic Star's properties have 4,160 slot machines, 116 table games, 21 poker tables and 806 hotel rooms.

They are the Majestic Star and Majestic Star II casinos and the Majestic Star Hotel in Gary, Ind.; Fitzgeralds Tunica in Mississippi and Fitzgeralds Black Hawk in Colorado.