Rivers Casino owners seek to buy out Barden group
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At one time the late Don Barden viewed the Pittsburgh casino as his legacy, the flagship of his gambling empire. But now, nearly one year after his death, Mr. Barden's last tie to the North Shore riverfront complex is vanishing.
The ownership of Rivers Casino is seeking approval from the Pennsylvania Gaming Control Board to purchase the 20 percent interest Mr. Barden and associated investors held in the complex.
If the gaming board agrees, it would mark the formal end of Mr. Barden's involvement in a project that he championed as the crown jewel of his gambling holdings, only to be forced to relinquish his control over it when he was unable to secure permanent financing for the construction.
In the transaction, Holdings Acquisition Co. L.P., the Rivers ownership, is proposing to buy the 20 percent limited partnership interest held in the property by PITG Entertainment LLC, which includes Mr. Barden and a small group of other investors.
The amount the ownership will pay for Mr. Barden's share was not disclosed in documents filed with the gaming board. Holdings Acquisition has asked that the purchase price stay confidential, gaming board spokesman Richard McGarvey said.
A date has not been set for a vote on the transaction.
In December 2006, on his birthday, Mr. Barden, a Detroit businessman, was awarded a license by the gaming board to build a $780 million casino on the North Shore next to the Carnegie Science Center. At the time, Mr. Barden pledged to make the venue the flagship of his empire, one that included casinos in Indiana, Mississippi, Las Vegas and Colorado.
But as the credit markets tightened, Mr. Barden was unable to secure permanent financing for his Majestic Star casino, causing construction to stop. He defaulted on a $200 million loan used to get the project going.
With the venture facing potential bankruptcy, Mr. Barden relinquished control of the casino to the current ownership, led by Chicago billionaire Neil Bluhm. It changed the name to Rivers Casino.
In the transaction, Mr. Barden went from owning 81 percent of the venue to a little less than 20 percent. He held a seat on the casino's management committee but had no controlling voice.
It was unclear Tuesday whether Holdings Acquisition initiated the purchase or whether it involved matters surrounding the estate of Mr. Barden, who died last May 19. Maureen D. Williamson, the attorney representing PITG Entertainment in the transaction, could not be reached for comment.
The casino issued a statement confirming the proposed transaction, adding that it would have no effect on operations.
The proposed purchase comes several weeks after Ira Schulman, a principal in Rivers' ownership, described the casino as a "terrible investment" in court testimony as part of the casino's appeal of its $199.5 million property assessment.
Mr. Schulman told Allegheny County Common Pleas Senior Judge R. Stanton Wettick Jr. that the casino 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 why the ownership would be buying out Mr. Barden's stake in the casino at the same time one of its principals was bad mouthing the property.
"If Rivers Casino was a terrible investment, why are the owners asking to raise their bet?" he wondered.
First Published May 9, 2012 12:00 am