Sault Ste. Marie Tribe of Chippewa Indians is the majority owner
By David Runk -- Associated Press
DETROIT (AP) - Greektown Casino said May 30 that gamers won't notice any changes and its ongoing $500 million expansion project, which includes a permanent hotel, will continue despite its filing for bankruptcy protection.
Casino officials also have told employees that they don't expect job cuts as part of a reorganization.
Greektown Holdings LLC, Greektown Casino LLC and their affiliates filed for Chapter 11 bankruptcy protection May 29 in U.S. Bankruptcy Court in Detroit after failing to comply with terms of a credit line.
''As we reorganize our business and complete our permanent casino construction with additional financing, the goal is a bigger and more viable Greektown Casino,'' casino management board chairman Tom Miller said in a statement.
The casino said it was finalizing $150 million in financing with its banks to continue operating and finish building its expanded gaming floor, which is expected to open this summer, and 400-room hotel, which is scheduled for completion early next year. Construction work continued May 30.
''With the support and confidence of our creditors, we have developed a plan to reorganize our business, and we will be implementing these action steps,'' Miller said.
Greektown Holdings said in a bankruptcy court filing its failure to comply with loan agreements with Merrill Lynch, Pierce, Fenner & Smith Inc. meant it couldn't draw money from its credit line and made it difficult to incur new debt without bankruptcy protection. That loan was $314.5 million as of March 31, the filing said.
The Sault Ste. Marie Tribe of Chippewa Indians is the majority owner of the casino, which is one of three Detroit casinos.
Tribal Chairman Aaron Payment said Greektown Casino employees were told May 29 that they shouldn't fear that their jobs might be at risk because of the bankruptcy filing. He blamed the filing in part on state casino regulators.
''We have filed for Chapter 11 to protect our assets from the unfair covenants placed upon Greektown Casino by the Michigan Gaming Control Board, a standard that the other two casinos in Detroit do not have to follow,'' Payment said.
Michigan Gaming Control Board Executive Director Rick Kalm denied Payment's claim, saying the board wasn't the reason behind the bankruptcy filing. He said the covenants, in place since 2005, are based on industry standards.
''Those covenants were agreed upon by the tribe when they were seeking additional financing,'' Kalm said.
The board had set a June 10 deadline for Greektown Casino to show why the state shouldn't force its sale. Michigan said the casino hadn't met state-mandated financial goals.
Asked about Greektown Casino at the Detroit Regional Chamber Mackinac Policy Conference on Mackinac Island, Gov. Jennifer Granholm said she planned to look into the reasons behind the bankruptcy filing.
''I need to find out what the reasons are behind that, because most casinos are doing very, very well,'' she said.
In November, Greektown Casino finished an attached parking structure, the first phase of construction on its new permanent facilities. The hotel complex had been scheduled to open this fall, but casino spokesman Roger Martin said that target has been pushed back by delays in construction.
MGM Grand Detroit and MotorCity Casino both have permanent hotel complexes in Detroit. The construction of permanent gaming facilities by the three casinos has been a key part of efforts to revitalize the city.
On Mackinac Island, Detroit Mayor Kwame Kilpatrick said the city depends on money collected from the casinos to operate and he's hopeful that Greektown Casino successfully navigates bankruptcy protection.
''I want to care about Greektown, but I care more about the dollars ... and taxes that we get, and I'm hopeful they can come out of this vibrant and alive because they've been adding to the vitality of downtown Detroit,'' Kilpatrick said.
Associated Press Writer John Flesher on Mackinac Island contributed to this report.
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