Chicago billionaire praised for rescuing casino project
November 15, 2008 5:00 AM
Neil Bluhm holds his gaming license after a tour of the casino construction site on the North Shore yesterday.
Construction continued on the North Shore casino yesterday.
By Mark Belko Pittsburgh Post-Gazette
For Neil Bluhm, it was a day to celebrate. For Don Barden, it was probably a day to forget.
Nearly a year after Mr. Barden broke ground on the Pittsburgh casino, a group headed by Mr. Bluhm, a Chicago billionaire, formally took control of the project, receiving the slots license from state Gaming Control Board members during a ceremony at the North Shore construction site.
Mr. Barden was forced to relinquish the license last summer, when he was unable to secure permanent financing for the project. Enter Mr. Bluhm's group, which gained majority ownership when it put $205 million in cash into the casino, rescuing it from a near-bankruptcy.
Yesterday, gaming board members and local politicians said Mr. Bluhm's involvement came just in the nick of time. He was able to secure $555 million in financing for the $800 million project before the nation's financial meltdown virtually dried up lending.
"In hindsight, we really look back now and see how important it was that Neil Bluhm and his team stepped forward because of the collapse of the financial markets around the world, particularly in the United States," Allegheny County Executive Dan Onorato said.
As the gaming board considered the proposed bailout by Mr. Bluhm's group, some legislators called for the Pittsburgh slots license to be rebid. The board made the "right decision" in resisting such demands, Chairwoman Mary DiGiacomo Colins said.
"I'm not sure we would have any applicants at this point," she said of a rebidding, "because money is not available."
Still, there could be tough tests ahead. The faltering economy is no friend to casinos, but Mr. Bluhm believes the Pittsburgh slots parlor still is in the position to succeed.
"People still want to go to a football game. They want to do something and have fun and we think they'll come here and gamble," he said. "We may not substantially exceed our projections if the economy is bad, but we're confident that we'll do OK. We put together conservative assumptions."
Greg Carlin, chief executive officer of Holdings Acquisition Co., the name of Mr. Bluhm's group, said the $205 million in equity in the project provides "some cushion" in the event of a slow start.
Crews hope to have the $800 million casino fully enclosed for winter by mid-December. It is still on schedule to open in August. It is expected to employ more than 1,000 people.
Mr. Barden had hoped to make the Pittsburgh casino the flagship of his Majestic Star chain. Ms. Colins said recent events have shown that he fell victim to "circumstances beyond his control."
Mr. Barden, who still has a 20 percent interest in the slots parlor, got more bad news yesterday when Majestic Star Casinos LLC, which owns his facilities in Indiana, Mississippi and Colorado, was unable to make a $24 million interest payment on outstanding debt by the end of a grace period yesterday.
The default allows lenders to foreclose on Majestic Star equity and assets, according to a statement issued yesterday.