Barden's stake in River's Casino transferred
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The "bad investment" the group led by Chicago billionaire Neil Bluhm made in acquiring Pittsburgh's Rivers Casino has just gotten a bit bigger.
Holdings Acquisition Co. L.P., the casino's ownership, won approval from the Pennsylvania Gaming Control Board Wednesday to purchase the 20 percent limited partnership interest held in the venue by the late Detroit businessman Don Barden and associated investors.
Mr. Barden, who died last year, won the state license for the Pittsburgh casino on his birthday in December 2006 but was unable to secure the financing needed to complete the project.
That allowed Mr. Bluhm and his group to gain control over the casino, although Mr. Barden retained the small financial interest through an entity known as PITG Entertainment LLC.
Mr. Barden was an African-American businessman and Wednesday's decision to approve the sale of his share will leave Pennsylvania without any minority ownership in its 11 casinos, a fact not lost on gaming board member Ken Trujillo.
"I'm a little chagrined by that, but I also understand the need for this transaction," he said.
The purchase price was not disclosed at the request of the casino's ownership.
With the purchase, Holdings Acquisition will increase its stake in the North Shore riverfront casino from 69.5 percent to 89.5 percent. It is solidifying its hold even though Ira Schulman, one of the principals in the ownership, testified in March that the casino has been a "bad investment" for the group.
Mr. Schulman told Allegheny County Common Pleas Court Senior Judge R. Stanton Wettick Jr. during a trial on whether the casino's property assessment should be lowered that the venue had lost $200 million in equity since it opened in August 2009 and that "with 20/20 hindsight, we would never have made this investment."
Jon Scolnik, a research analyst for Unite Here, a union that follows the gambling industry and organizes workers, questioned after Wednesday's meeting how the ownership "could tell a judge in March that the casino was a bad investment" and then seek permission to increase its ownership stake.
First Published June 14, 2012 12:00 am