Indiana Downs has become the second Indiana racetrack to file for bankruptcy protection.
Indianapolis Downs LLC, which operates Indiana Downs and its companion Indiana Live! Casino, said April 7 the company and a related entity filed voluntary Chapter 11 petitions in U.S. Bankruptcy Court for the District of Delaware. The company said its facilities will continue to operate as usual during the restructuring process, and that there will be no interruption in services.
“This filing is unlike many debt-restructuring cases because Indianapolis Downs has steadily grown its revenue and market share since opening,” the company said in a statement.
Last year Hoosier Park Racing & Casino owner Centaur filed for bankruptcy protection. The Indiana track also was seeing growth but, like Indiana Downs, found it hard to overcome the $250 million license fee it had to pay to obtain slot machines.
In its filing, Indianapolis Downs stated it possesses “strong underlying fundamentals, operates on a cash-positive basis, and generates enough revenue to pay its operating expenses.” However, the company noted it has been operating with a debt burden significantly greater than anticipated and beyond its ability to service under current terms.
The company cited the license fee and “high statutory tax rate.”
Indianapolis Downs said that, in conjunction with the bankruptcy filing and pending court approval, it has secured debtor-in-possession financing of about $103 million from a group led by Wells Fargo. The move will provide for immediate access of up to $5 million and will lower interest expenses.
“Indiana Live! and Indiana Downs is an operationally profitable, but new, business that has not yet achieved its full potential,” chief restructuring officer Greg Rayburn said in a statement. “As a result we see this decision as an enabling step for our company, as the process will allow us to restructure our debt, make operational improvements, and benefit from other available value enhancements.
Indiana Downs opened for live racing in 2002. Its 2011 Thoroughbred meet begins April 18.