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Chris Sieroty

Nevada-based casino company comes out of bankruptcy

14 December 2011

LAS VEGAS, Nevada -- Las Vegas-based Majestic Star Casino LLC, which owns and operates casinos in Mississippi, Colorado and Indiana, has come out of bankruptcy reorganization with new owners and $500 million less debt.

"We are emerging from Chapter 11 with a strengthened balance sheet and the ability to compete more effectively in our respective markets," Majestic Star Chief Operating Officer Mike Darley said.

An investment fund managed by Minnesota-based Wayzata Investment Partners LLC is the largest holder of the reorganized casino company, which owns the Majestic Star Casino and the Majestic Star II in Gary, Ind., and the Fitzgeralds Casino Hotel - Tunica in Mississippi and Fitzgeralds Black Hawk in Colorado.

Messages left Tuesday with Patrick Halloran, managing partner of the private equity firm, were not returned.

Other lenders to the prebankruptcy Majestic Star are also now owners of the new parent company, Majestic Holdco LLC. Majestic Star filed a voluntary bankruptcy petition on Nov. 23, 2009, after defaulting on $580 million in long-term debt obligations covering its gaming properties.

Majestic Star was created and led by the late gaming executive Don Barden, who through another company once controlled Fitzgeralds Casino & Hotel in downtown Las Vegas. Barden died in May, about two months after a bankruptcy judge approved Majestic Star's reorganization plan.

The company, which Barden founded in 1993, filed for bankruptcy after talks on restructuring its debt obligations failed and lenders threatened to foreclose. The company reported $540.5 million in assets and $941.7 million in liabilities, including $630 million in outstanding debt, in a July 2010 court filing.

U.S. Bankruptcy Judge Kevin Gross approved the restructuring plan March 10 after Majestic Star resolved creditor objections and disputes with the city of Gary, where it operates two casinos.

According to documents filed with the U.S. Bankruptcy Court in Wilmington, Del., senior secured noteholders, who are owed about $348.4 million, will receive about 52 cents on the dollar. Senior noteholders owed about $233.1 million will receive 42 percent of the equity in the new company for an estimated recovery of 25 percent.

Darley said that with reorganization completed, the company was "better positioned than ever before to provide our visitors and guests with the best hospitality, entertainment and gaming experience possible."

Darley said he was optimistic about the future of the business and looked forward to building Majestic Star into a stronger, more successful company.

The reorganized company also has a reorganized board, which includes Halloran of Wayzata; Joseph Deignan, a Wayzata partner; John Risner, director at The Children's Tumor Foundation; and Cezar Froelich, chairman and founding partner of the law firm Shefsky & Froelich Ltd.