Isle of Capri nets three possible management deals last week

It was a big first week of the new year for Isle of Capri Casinos. The respected regional casino company could have stakes in some of the industry's major gaming jurisdictions if all comes to fruition.

To start with, the company was named as the gaming operator for Greektown Casino Hotel in Detroit, replacing the Fine Point Group, whose contract expired on December 31.

Greektown's three-member management board has hired Isle to manage the bankrupt Detroit, Michigan casino and named Cliff Vallier to be CEO. Vallier moves up from several management positions at the casino, the most recent being CFO and assistant general manager.

Isle of Capri will be paid a total of $450,000 for 2010.

The casino, one of three in Detroit, has been in Chapter 11 bankruptcy reorganization since the middle of 2008. The Fine Point Group managed the casino during 2009, producing extraordinary results, partially because a new hotel opened at Greektown early in the year. In the past year the casino has managed to grab a larger market share from its two competitors, MotorCity and MGM Grand Detroit, growing its revenue while their revenues actually declined.

Because Greektown is in bankruptcy, these appointments must be approved by both the federal bankruptcy court and the Michigan Gaming Control Board.

Jake Miklojcik, one of the management board members, commented, "This new leadership has the extensive experience and demonstrated ability necessary to boost the performance of the property over the long term. As we look to the future and continue to seek opportunities to improve performance, maximize profits and minimize costs, Vallier and Isle of Capri know the Midwest market, they know casino management and they are positioned to take the property to the next level."

Later in the week, it was revealed that Isle had reached agreement with a group of Station Casinos debtors to take over management at four of the company properties if a judge rejects a lease arrangement on the properties that was part of the deal when Station Casinos went private in 2007. The "PropCo" properties-Palace Station, Sunset Station, Boulder Station and Red Rock Casino Resort-would be turned over to the debtor as a result of the Station Casinos bankruptcy proceedings.

The lenders, led by Deutsche Bank, made the consultancy agreement with Isle last year in the event that the bankruptcy judge turns the properties over to them. Lenders have a problem with a provision in the contract that pays Station Casinos almost $250 million each year to run the properties. Although the lease payments were temporarily reduced last month, lenders want to option to take over the properties to preserve their interest.

The Isle agreement is independent of an offer by Boyd Gaming to buy the company, which Boyd increased late last year. Station has an exclusive agreement with the court to propose its own reorganization plan until March 25. The bankruptcy court will hear a separate petition from the lenders on January 25 asking that they be allowed to sue Station Casinos for the stipulations when the company was taken private two years ago.

And finally, to cap off the busy week, the company announced it would bid on one of the final casino licenses in Pennsylvania-a "Category 3" license-at Nemacolin Woodlands Resort in Farmington, Fayette County. There have been few bidders on these secondary licenses because of various restrictions, but changes to the legislation included in the table game bill signed last week by Governor Ed Rendell (See U.S. Gaming) made it feasible to operate now.

Nemacolin Woodlands President and Owner Maggie Hardy Magerko said the reduction of the patron expenditure aspect of the bill from $25 to $10 and the addition of more slot machines for each property made the licensing "a very attractive opportunity."

"Add to this the management and marketing expertise of Isle of Capri, one of the most recognizable and experienced names in the gaming industry, and we believe we have the best venue in terms of resort amenities and management to effectively and profitably operate a casino," said Hardy Magerko.

Hardy Magerko said the casino will be located in a former outdoor store located on the property.

"We believe Nemacolin Woodlands Resort with our vast array of amenities ranging from the Woodlands Spa, to Mystic Rock Golf Course, to sporting clays, off road course, skiing, fine dining and many other activities offers the premiere resort venue in the state and with the expertise of Isle of Capri will result in a casino that offers a unique experience for our patrons and maximizes the economic benefits for the state," said Hardy Magerko.

Isle President and COO Virginia McDowell was pleased with the arrangement reached with Hardy Magerko.

"Since we first began our discussions with Nemacolin Woodlands and visited the facility, our team has been convinced that this is the right opportunity in the perfect location to build a resort casino in Pennsylvania," she said. "Nemacolin Woodlands is Pennsylvania's premier resort destination, and the plans we are building together will situate the property to produce maximum benefits for the state and the community."
Isle owns 13 casinos in the United States in Lula, Biloxi and Natchez, Mississippi; Kansas City, Caruthersville and Boonville, Missouri; Bettendorf, Davenport, Waterloo and Marquette, Iowa; Black Hawk, Colorado; Lake Charles, Louisiana; and Pompano Beach, Florida.

McDowell told GGB News that the developments were part of the strategy developed by the company about a year ago.

"Our plan was to seek management contracts and transitional consulting agreements," she says. "We have a very talented group of executives with experience in more than 75 major gaming properties in every major jurisdiction. It requires little to no investment from us and produces revenue, so it's a win-win for everyone involved, especially our shareholders."

By Staff