North Shore Construction to Restart Again After Neil Bluhm Takes Over Its Management

On August 16th, 2008, after eighteen months of false starts, the financing is in to construct the North Shore casino. The investment group that took over the control of the casino closed on more than $550 million in loans, according to Dan Fee, the spokesperson for the owners. Employees returned to the North Shore construction site shortly before the agreement was finalized and began preparing the equipment idled at the end of June 2008, when former majority owner Don Barden run out of financing.

Greg Carlin, the Chief Executive Officer of Holdings Acquisitions, the company that will managed the casino said that with the closing of the financing agreement, they are very excited to restart the construction of the facility immediately and make a world class gaming facility of which Pittsburgh residents can be content and proud of. Carlin runs the casino facilities owned Chicago billionaire Neil Bluhm, who leads the investment group. The Majestic Star casino is scheduled to open on August 2009 and is expected to be the most profitable slots casino in Pennsylvania.

In its first 5 years of operation, Bluhm's team expects the slots casino to produce around $1 billion in tax money for Pennsylvania and $98 million for Pittsburgh and Allegheny County. Casino owners will give 3 million each to Hill District and North Side development efforts during the 3 years after the Majestic Star Casino opens. They will pay around $225 million over thirty years toward the Uptown arena for the Penguins.

The Pennsylvania Gaming Control Board approved Bluhm's takeover of the North Shore casino the day of the groundbreaking of the arena. Barden could not finalize a deal on the casino's financing, mainly because of worries about the credit market. The ongoing problem has hit hard casinos, once thought to be unaffected by any problems with the economy. At least three casino facilities in the U.S. but none in Pennsylvania-have filed for bankruptcy.

Even gaming giant MGM Mirage has had some problems getting $3 billion in financing for the CityCenter-its latest project in Las Vegas. A gambling industry analyst from the Deutsche Bank, Bill Lerner said that we are seeing some gaming deals getting done, but it is in a much slower rate. Gaming analysts and others raised some concerns about Don Barden's decision to pay for the casino project by using loans. The Pennsylvania gaming board has been criticized for choosing Barden as the slots licensee in December 2006, despite rumors that he was not financially stable. Bluhm's group is investing $205 million in the $780 million project. Lerner said that Bluhm's ability to close deals has something to do with his relationships and his balance sheet.

About $405 million is coming from lender led by Credit Suisse. $150 million is coming from the Key Bank and is guaranteed by two Detroit municipal pension funds. The rest is coming from other investors like Ira Lubert, a Philadelphia real estate investor. Barden will keep a 16% ownership of the casino and his original group of investor will divide the remaining four percent.

Sunday, 07 September 2008
Alex Van Der Butz