SEARCH NEWS:

 

Court Ruling Affirms Dismissal of Stratosphere Litigation

In September 1997, the trustee under the indenture for Stratosphere's first mortgage notes filed a complaint in the U.S. District Court for the District of Nevada naming Grand Casinos, Inc. (Grand) as defendant. The complaint alleged that Grand failed to perform under the standby equity commitment entered into between Stratosphere and Grand in connection with Stratosphere's issuance of such first mortgage notes in March 1995.

As part of the transaction establishing Lakes as a separate public company on December 31, 1998, Lakes agreed to indemnify Grand against all costs, expenses and liabilities incurred in connection with or arising out of certain pending and threatened claims and legal proceedings to which Grand and certain of its subsidiaries were likely to be parties.

In April 2001, Federal Judge David Hagen, following trial, ruled in favor of Grand Casinos, Inc. and against the group of note-holders called Stratosphere Litigation LLC. On August 13, 2002, the Court of Appeals affirmed Judge Hagen's decision. The plaintiffs have the right to request a Court of Appeals rehearing within 14 days of the Court's decision or petition for review by the United States Supreme Court within 90 days.

Lyle Berman, Chairman of the Board and CEO of Lakes stated, "We are very pleased about the rejection of the Stratosphere note-holders' arguments by the Court of Appeals. The opinion upholds the discharge of any funding requirements in relation to the claim, for which Lakes would have been required to indemnify Grand. This is the third time the note-holders' claims have been rejected. Subject to the possibility of further appeal or rehearing, we believe this development effectively removes a major uncertainty which had previously been surrounding our company."

Lakes Entertainment, Inc. currently has development and management agreements with four separate Tribes for four new casino operations, one in Michigan, two in California and one with the Nipmuc Nation on the East Coast. Lakes Entertainment also has agreements for the development of one additional casino on Indian-owned land in California through a joint venture with MRD Gaming. Additionally, the Company owns approximately 80% of World Poker Tour, LLC, a joint venture formed to film and produce poker tournaments for television broadcast.

Lakes Entertainment, Inc. common shares are traded on the Nasdaq National Market under the trading symbol "LACO".

< Gaming News