
A combination of anxiety and curiosity has built in recent weeks surrounding Don Barden's efforts to secure $780 million in financing for the Majestic Star casino, and it could come to a head at the construction site Monday.
The team of more than 20 companies erecting the North Shore casino has not been paid on time for work done in either April or May, according to the primary contractor. They agreed on one extension already at a June 16 meeting with Mr. Barden. They meet with him again on Monday, and will decide collectively what action to take if he cannot provide payment of about $10 million that is owed, said Dan Keating III, chairman of Philadelphia-based Keating Building Corp., the primary contractor.
The Keating firm is responsible for submitting bills to Mr. Barden on behalf of all of the subcontractors, who are supposed to be paid monthly. The companies have supported and trusted Mr. Barden throughout, but they also have financial needs that must be met, said Mr. Keating.
They have continued paying their workers, who have made steady and visible progress in recent months on the project towered over by five cranes west of Heinz Field. The casino and adjacent garage remain on schedule to be completed next May, Mr. Keating said.
"These contractors have been kept fully apprised of Don's issues and the marketplace," he said. "We will try to aid and assist him in every way possible. ... Still, these folks have all done their jobs very well and are entitled to get paid. The next few days will be very interesting."
Mr. Barden, a Detroit-based businessman with casinos in Nevada, Indiana, Mississippi and Colorado, has given repeated public and private assurances that financing will fall into place for the Pittsburgh Majestic Star. He has been unable to complete the plan, however, and publicly identified only one of the lenders, Apollo Strategic Value Fund LP. Apollo is part of a private equity firm that joined in a recent purchase of Harrah's Entertainment.
A major financial company, Credit Suisse, continues working with Mr. Barden to try to line up the necessary lenders. Credit Suisse provided the $200 million bridge loan that enabled construction to begin, and it granted Mr. Barden more time to cover it when he was unable to arrange permanent financing by the May 19 due date.
Bob Oltmanns, a spokesman for Mr. Barden and his local company, PITG Gaming LLC, said Mr. Barden is working on the financing package as quickly as he's able, but it was uncertain if it would be completed by Monday. No specific explanation for the delay has been offered, and Mr. Barden has no intention of discussing the financial issues publicly, Mr. Oltmanns said.
"This is a complex transaction with lots and lots of moving parts," he said. "It's just taking a lot of time to complete, and in the current credit market that we're living in, it certainly adds to that level of complexity."
The Pennsylvania Gaming Control Board has been awaiting a report from Mr. Barden on financing for the project. He had to ask this month for additional time before unveiling those details, which are subject to board approval.
Board spokesman Doug Harbach said officials are paying "close attention to Mr. Barden's refinancing negotiations and the construction project. If anything should occur that would lead to any stoppage, the board will address that matter at that time."
Richard Stanizzo, business manager of the Pittsburgh Building and Construction Trades Council, which represents laborers at the site, said those workers have all been paid promptly up to now, even if the companies employing them have not. The contractors involved are financially sound companies accustomed to lag time on a project in receiving payment from the developer, he said.
"A contractor could easily work on a job site six to eight weeks without getting penny one. That's normal in the construction industry," Mr. Stanizzo said.
Mr. Keating said shutdown of a major project like the casino for nonpayment is rare in the industry. Those involved in the work typically would want to avoid doing anything to thwart the momentum that has built, with foundations laid, steel erected, and masonry, electrical and mechanical work all progressing.
"Nobody wants to go through a monthly scare, so what we're looking for is complete financing of the project so all of these issues are resolved," Mr. Keating said.
"I speak with Don constantly, and I know how hard he's working to put this together. ... He knows the deal and isn't shying away from any obligation. Hopefully, in the next day or so we have a solution to where he wants to go."
