03/08/2010 12:00AM

Hoosier Park owner files Chapter 11


The parent company of Hoosier Park racetrack and casino in Indiana filed for Chapter 11 bankruptcy on Saturday, according to court records and a release from the company.

In a release, Centaur Gaming LLC, which operates Hoosier and a casino in Colorado, said that its properties would all remain open while the company is under the protection of the bankruptcy court. The release stated that the company intended to use the bankruptcy filing to restructure its debt.

"Upon emergence, the company will be in a strong financial position with less debt and an improved capital structure," the release said.

Centaur also owns and operates three offtrack betting facilities in Indiana. Those properties will also remain open, the company said.

In October of last year, Centaur failed to make a $13.4 million payment on its debt to two senior lenders, the Grand Cayman Island branch of Credit Suisse and Wells Fargo. At that time, two units of the company that were seeking to build a harness track and casino in Pennsylvania filed for bankruptcy.

In documents filed in bankruptcy court on Saturday, Centaur, which is privately held, said that it has $584 million in assets and total liabilities of $681 million. The documents claimed that the company generated $277.5 million in revenue in 2009.

The documents said that Centaur owes $382.5 million on its first loan to the Caribbean branch of Credit Suisse, an amount that includes a $28.7 million liability under credit-default swaps the company negotiated with the bank to reduce the risk associated with a variable interest rate that applied to the debt. In addition, Centaur owes Wells Fargo $192 million, according to the documents, after reaching an agreement for a $180 million line of credit in September 2008. The loans are secured with liens on all of Centaur's properties.

With 2,000 slot machines, the Hoosier Park casino had net revenues of $202 million in 2009, its first full year of operation, according to the Indiana Gaming Commission. The company paid $55.8 million in state wagering tax from that revenue.

According to earlier statements, the Hoosier Park casino was financed with money provided by MH Equity, a private-equity company headed by Stephen Hilbert. Hilbert is the former head of Conseco, an Indiana insurance company that once owned a 10 percent stake in Hoosier. Conseco sold the stake to Centaur in 2001, one year after Hilbert resigned following the collapse of Conseco's stock.

Centaur purchased Hoosier Park outright in 2007 by buying out the equity held by Churchill Downs Inc. Under that agreement, Centaur was required to pay Churchill Downs $15 million after slot machines had been operating for 18 months at Hoosier, but Churchill said in financial documents filed last week with the SEC that "collectability of the amounts due [from Centaur] is not assured, and therefore, we have not recognized the amount due under the agreement."

Construction of Centaur's proposed Pennsylvania harness track is on hold because the project has not yet received a slot-machine license. Regulators in Pennsylvania have said they will not grant a casino license to the track unless Centaur proves it has adequate financing in place.