Facing an idle construction scene and gaming board scrutiny of his financing, Detroit developer Don Barden last week surrendered a 75 percent interest in his Majestic Star casino project in Pittsburgh to Walton Street Capital Fund 6, an investment firm headed by Chicago billionaire Neil Bluhm, and a consortium of affiliated investors.
In a hearing before the Pennsylvania Gaming Control Board, Barden outlined the equity deal, which is being arranged as part of an agreement to secure the final USD 120 million in financing needed to complete the USD 780 million casino. Barden will retain a 25 percent stake in his company, PITG Gaming, but he will have the right to repurchase a larger stake in the future.
Bluhm, who also is the lead investor in Philadelphia’s stalled SugarHouse casino project, will personally own less than 1 percent of the Pittsburgh project-which satisfies a provision of Pennsylvania gaming law that prevents one casino owner from owning more than one-third of a second gaming venture.
Bluhm, in comments to the Pittsburgh Post-Gazette, said Barden is not at fault for the difficulties he has encountered in arranging the financing. “You have the biggest banks in the world struggling today,” he said. “So to put together a USD 750 million-actually it’s closer to USD 800 million-project in this environment is extremely difficult, whether it’s Bear Stearns or Don Barden. It’s not his fault.”
Barden’s commitments made when he was awarded the city’s sole slot license-in a surprising victory over deep-pocketed rivals Harrah’s and Isle of Capri-will be fulfilled under the new ownership, Bluhm has indicated. The casino will provide the USD 9 million in annual payments to help finance a new hockey arena for the Pittsburgh Penguins and for inner-city development. A 1,000-seat outdoor amphitheater, boat docks and other improvements to the Ohio River waterfront, which Barden had sought to delay, also will go forward as originally planned.
Gaming board members urged Barden to complete the deal to complete the financing package so construction can resume. The parties were working to finalize the deal by the end of the week. dents of Pennsylvania,” Garrity said in a statement.