Kerzner, BLB partners fail to meet debt payment on R.I. racino

Mar 18, 2008 6:00 PM

Industry Insider by Ray Poirier | Has Sol Kerzner, the owner of the Atlantis Resort on Paradise Island as well as casinos in South Africa and other areas, picked a loser in the U.S.?

Two years ago, Kerzner, who is partnering with MGM MIRAGE Inc. (MGM) on a casino resort project on the northern section of the Las Vegas Strip across from the Sahara Hotel/Casino, bought a Rhode Island dog track/slots emporium with two other companies, Waterford Development Group and Starwood Hotels Inc. (HOT). They formed a partnership called BLB Investors L.L.C.

Lincoln Downs Greyhound Park, the track they acquired from London based Wembley Ltd., fell into BLB Investors hands after the track’s CEO and his English boss were jailed for attempting to bribe a state official.

Prior to the sale, the track became a huge cash producer when the legislature permitted it to install video lottery machines. It was the Wembley company’s greed and its efforts to receive approval to expand the slots activity that caused its downfall.

With the promise of an infusion of additional cash from BLB Investors, who established a wholly-owned subsidiary called UTGR Inc. to run the Lincoln racino, the state permitted the track to increase its slots floor to 4,752 machines.

It also was looking for UTGR to spend $125 million as part of a major expansion of the facility.

It just might be that the expansion investment was more than the property could handle.

Last week, Standard & Poor’s Rating Services downgraded the credit rating of the track, now called Twin River Casino because the operating company had missed one of its loan payments to lenders. And a day later, a construction firm placed a lien against the property for lack of payment of a $5 million project.

Analysts said that the expansion had resulted in more revenue being generated but they were concerned that there might not be enough cash flow to meet the cost of the massive expansion.

A Twin River spokeswoman said the company was working with lenders to resolve the problem.