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Best of Howard Stutz

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Howard Stutz
 

Isle of Capri to take over Greektown in Detroit

6 January 2010

LAS VEGAS, Nevada -- St. Louis-based regional casino operator Isle of Capri Casinos will take over management of the bankrupt Greektown Casino in Detroit.

The casino had been managed by the Las Vegas-based Fine Point Group, whose contract expired on Dec. 31.

The casino, which has been operating under Chapter 11 bankruptcy protection, filed a request Tuesday with U.S. Bankruptcy Court in Detroit seeking approval for Isle of Capri to be hired as a gaming consultant. The casino also would need approval from the Michigan Gaming Control Board.

Isle of Capri owns and operates casinos in Colorado, Florida, Iowa, Louisiana, Mississippi and Missouri.

According to the Detroit Free Press, Isle of Capri of Michigan LLC would earn a management fee of $200,000 a month for six months and $250,000 per month in the following months.

"We firmly believe in the upside potential at Greektown, and the team now in place has the skills and experiences to help guide the management through the remainder of their reorganization," Virginia McDowell, president and chief operating officer of Isle of Capri, said in a statement.

Macquarie Securities gaming analyst Joel Simkins told investors that Isle could also earn performances driven bonuses based on cash flow.

Simkins said Isle of Capri's move into Detroit could foretell future moves.

"This is a relevant data point for the industry and highlights that owners of distressed assets will continue to look towards public operators with diversified portfolios and solid track records for management expertise," Simkins told investors.