Attached files
EXHIBIT
99.1
INDEPENDENT
AUDITORS’ REPORT
Belle of
Orleans, L.L.C.
dba
Amelia Belle Casino:
We have
audited the accompanying balance sheets of Belle of Orleans, L.L.C. dba Amelia
Belle Casino (the “Company”) as of December 31, 2008 and 2007, and the
related statements of operations, changes in member’s equity (deficit) , and
cash flows for the years then ended. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, such financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2008 and 2007, and the
results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
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/s/
Deloitte & Touche, LLP
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Cincinnati,
OH
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July
20, 2009
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BELLE OF
ORLEANS, L.L.C.
dba
AMELIA BELLE CASINO
BALANCE
SHEETS
DECEMBER 31,
2008 AND 2007
(in
thousands)
|
December 31,
2008
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December 31,
2007
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|||||||
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ASSETS
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||||||||
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Cash
and cash equivalents
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$
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15,038
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$
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6,358
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||||
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Accounts
receivable trade, net
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68
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84
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||||||
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Insurance
receivable
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3,706
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-
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||||||
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Accounts
receivable from related parties
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1,984
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5,559
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||||||
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Inventories
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55
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62
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||||||
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Prepaid
expenses and other assets
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903
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768
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||||||
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Total
current assets
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21,754
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12,831
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||||||
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Property
and equipment, net
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44,724
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48,681
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||||||
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Intangible
assets, net
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10,644
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10,667
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||||||
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Total
Assets
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$
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77,122
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$
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72,179
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||||
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LIABILITIES
AND MEMBER’S EQUITY
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||||||||
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Accounts
payable
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$
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1,015
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$
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2,020
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||||
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Accounts
payable to related parties
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101
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12,577
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||||||
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Accrued
expenses and other liabilities
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8,762
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1,102
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||||||
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Total
current liabilities
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9,878
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15,699
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||||||
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COMMITMENTS
AND CONTINGENCIES
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||||||||
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Member’s
equity
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67,244
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56,480
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||||||
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TOTAL
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$
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77,122
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$
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72,179
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||||
The
accompanying notes are an integral part of the financial
statements.
BELLE OF
ORLEANS, L.L.C.
dba
AMELIA BELLE CASINO
STATEMENTS
OF OPERATIONS
YEARS
ENDED DECEMBER 31, 2008 AND 2007
(in
thousands)
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2008
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2007
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|||||||
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REVENUES:
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||||||||
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Casino
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$
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55,622
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$
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32,649
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||||
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Food
and beverage
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3,616
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1,860
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||||||
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Other
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369
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284
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||||||
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Less
promotional allowances
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(5,548
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)
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(2,513
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)
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||||
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Total
net revenues
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54,059
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32,280
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||||||
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EXPENSES:
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||||||||
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Casino
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9,624
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7,489
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||||||
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Food
and beverage
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3,078
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2,118
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||||||
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Marketing,
advertising and casino promotions
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4,095
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1,587
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||||||
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Gaming
taxes and licenses
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11,959
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6,985
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||||||
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Administrative
and general
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6,980
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6,390
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||||||
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Impairment
of related party receivables
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2,741
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-
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||||||
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Insurance
proceeds, net
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(6,025
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)
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(9,248
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)
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||||
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Depreciation
and amortization
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4,748
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2,692
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||||||
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Total
expenses
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37,200
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18,013
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||||||
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INCOME
FROM OPERATIONS
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16,859
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14,267
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||||||
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OTHER
INCOME (EXPENSE):
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||||||||
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Interest
income
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25
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37
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||||||
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Interest
expense
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-
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(1
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)
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|||||
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Total
other income
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25
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36
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||||||
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NET
INCOME
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$
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16,884
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$
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14,303
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||||
The
accompanying notes are an integral part of the financial
statements.
BELLE OF
ORLEANS, L.L.C.
dba
AMELIA BELLE CASINO
STATEMENTS
OF CHANGES IN MEMBER’S EQUITY (DEFICIT)
YEARS
ENDED DECEMBER 31, 2008 AND 2007
(in
thousands)
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COMMON
MEMBER’S
EQUITY/
(DEFICIT)
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||||
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BALANCE,
JANUARY 1, 2007
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$
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(153,323)
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||
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Net
income
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14,303
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|||
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Net
equity adjustment for debt under co-borrower arrangement (see Note
5)
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195,500
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|||
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BALANCE,
DECEMBER 31, 2007
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56,480
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|||
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Net
income
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16,884
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|||
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Member
distributions
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(6,120)
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|||
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BALANCE,
DECEMBER 31, 2008
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$
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67,244
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||
The
accompanying notes are an integral part of the financial
statements.
BELLE OF
ORLEANS, L.L.C.
dba
AMELIA BELLE CASINO
STATEMENTS
OF CASH FLOWS
YEARS
ENDED DECEMBER 31, 2008 AND 2007
(in
thousands)
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2008
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2007
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||||||
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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||||||||
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Net
income
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$
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16,884
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$
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14,303
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||||
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Adjustments
to reconcile net income to net cash flows provided by operating
activities:
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||||||||
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Depreciation
and amortization
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4,748
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2,692
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||||||
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Terminated
project costs
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283
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|||||||
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Impairment
of related party receivables
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2,741
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|||||||
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Insurance
proceeds for property damage
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(6,939
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)
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(10,178
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)
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||||
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Changes
in operating assets and liabilities:
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||||||||
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Accounts receivables
trade, net
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16
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555
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||||||
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Inventories,
prepaid expenses and other assets
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(128
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)
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(532
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)
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||||
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Accounts
payable
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(577
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)
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1,276
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|||||
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Accrued
expenses and other liabilities
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3,954
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1,005
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||||||
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Related
party receivables and payables, net
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(11,642
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)
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10,097
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|||||
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Net
cash flows provided by operating activities
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9,340
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19,218
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||||||
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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||||||||
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Additions
to property and equipment
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(1,479)
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(23,246
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)
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|||||
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Insurance
proceeds for property damage
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6,939
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10,178
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||||||
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Net
cash flows provided by (used in) investing
activities
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5,460
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(13,068
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)
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|||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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||||||||
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Distributions
to member
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(6,120)
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|||||||
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Net
cash flows used in financing activities
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(6,120
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)
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||||||
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NET
INCREASE IN CASH AND CASH EQUIVALENTS
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8,680
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6,150
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||||||
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CASH
AND CASH EQUIVALENTS AT BEGINNING OF YEAR
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6,358
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208
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||||||
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CASH
AND CASH EQUIVALENTS AT END OF YEAR
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$
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15,038
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$
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6,358
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||||
The
accompanying notes are an integral part of the financial
statements.
BELLE OF
ORLEANS, L.L.C. dba AMELIA BELLE CASINO
NOTES TO
FINANCIAL STATEMENTS
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1.
Organization and Basis of
Presentation
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Belle of
Orleans, L.L.C. (the “Company”) was acquired by Columbia Properties New Orleans,
LLC (CPNO) on June 8, 2005. CPNO is a wholly owned subsidiary of Wimar Tahoe
Corporation (WTC) (fka Tropicana Casinos and Resorts, Inc.). WTC is
CPNO’s sole member. The Company owns and operates the Amelia Belle
Casino, a riverboat casino (fka Belle of Orleans) in Amelia,
Louisiana. The Belle of Orleans was damaged by Hurricane Katrina on
August 28, 2005 and was closed for repairs until May 18, 2007 (see Note
8). The casino was moved to Amelia, Louisiana and reopened as the
Amelia Belle Casino. The financial position of the Company as of
December 31, 2007, and the results of its operations and its cash flows for year
then ended are reflective of only a partial year of normal operations from May
18, 2007 through December 31, 2007. The period prior to May 18, 2007
consisted of construction, repair, employee training and other activities
necessary to ready the Amelia Belle Casino for normal operations. Columbia
Sussex Corporation (CSC), a company controlled by the sole shareholder of WTC,
provides various services to the Company (see Note 6).
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2.
Summary of Significant Accounting
Policies
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The
following is a summary of significant accounting policies followed in the
preparation of the financial statements. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires the use of management’s estimates and
assumptions that affect the reported amount of assets, liabilities, revenues and
expenses and disclosures of contingent assets and liabilities. Actual
results could differ from these estimates.
Cash and Cash
Equivalents - The Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash
equivalents.
Inventories
– Inventories, which consist primarily of food, beverage, and operating
supplies, are stated at the lower of cost or market. Cost is
determined by the first-in first-out method.
Property and
Equipment - Property and equipment are stated at
cost. Depreciation and amortization are computed over the estimated
useful lives of the property and equipment on the straight-line
method. Useful lives range from 10 to 40 years for the riverboat and
related equipment, 5 to 10 years for gaming and other equipment and 10 to 40
years for land improvements. Included in accounts payable at December
31, 2007 is $0.4 million relating to unpaid capital expenditures.
Routine
maintenance and repairs are charged to expense as incurred. The cost
and related accumulated depreciation of property and equipment retired or sold
are removed from the accounts, and the resulting gain or loss is included in
operations.
Management
reviews property and equipment for impairment whenever events or changes in
circumstances indicate the carrying amounts of the assets may not be
recoverable. Recoverability is determined by comparing the forecasted
undiscounted cash flows of the operation to which the assets relate, plus the
assets’ residual value to the carrying amount of the assets. If the
operation is determined to be unable to recover the carrying amount of its
assets, then the property and equipment are written down to fair
value. Fair value is determined based on discounted cash
flows.
Intangible
Assets – Pursuant to Statement of Financial Accounting Standard No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142), the Company's non-amortizing
indefinite-lived intangible asset, consisting solely of a gaming license with
the state of Louisiana, is subject to testing for impairment annually or more
frequently if events or changes in circumstances indicate that the asset might
be impaired. When testing for impairment, the Company uses the income approach,
which includes an analysis of the market, cash flows, and risks associated with
achieving
such cash flows. There was no impairment charge recorded in either 2008 or 2007.
The non-amortizing intangible asset has a carrying value of $10.6 million at
December 31, 2008 and 2007 (Note 4).
In
accordance with SFAS 142, an intangible asset with a definite life is amortized
over its useful life which is defined as the period over which the asset is
expected to contribute directly or indirectly to future cash
flows. Amortization is computed on a straight-line basis for
intangible assets with definite lives over an estimated useful life of five
years. Management periodically assesses the amortization period of
intangible assets with definite lives based upon an estimate of future cash
flows from related operations.
Revenue
Recognition - Casino revenue is (a) the win from gaming activities, which
is the difference between the gaming wins and losses, less sales incentives and
other adjustments and (b) revenue from gaming related activities such as poker
and tournaments. Jackpots, other than the incremental amount of
progressive jackpots, are recognized at the time they are won by customers. The
Company accrues the incremental amount of progressive jackpots as the
progressive machine is played and the progressive jackpot amount increases, with
a corresponding reduction of gaming revenue. The retail value of food and
beverage and other services furnished to casino guests without charge is
included in gross revenue and then deducted as promotional
allowances.
Casino
Promotional Allowances - Casino promotional allowances consist of the
retail value of complimentary food and beverages and entertainment provided to
casino patrons. Also included is the value of the coupons redeemed for cash at
the property. The estimated cost of providing such complimentary services
(substantially all of which is classified as casino expenses) total $3.1 million
and $1.3 million for the years ended December 31, 2008 and 2007,
respectively. Promotional allowances also include "cash back" awards
(cash coupons, rebates or refunds) which total $2.5 million and $1.2 million for
the years ended December 31, 2008 and 2007, respectively.
Advertising
Costs – Advertising costs are expensed as incurred and were $0.9 million
for each of the years ended December 31, 2008 and 2007 and are included in
marketing, advertising and casino promotions expense in the accompanying
statement of operations.
Retirement
Plans -The Company participates in a defined contribution plan sponsored
by CSC which operates under the provisions of Internal Revenue Code Section
401(k). All employees who meet plan eligibility requirements are eligible to
participate in the plan. Participating employees receive employer
matching contributions based on their level of employee contributions to the
plan. These employer matching contributions are funded at the same
time that employee contributions are made. The Company’s matching contributions
to the 401(k) Plan for both 2008 and 2007 were less than $0.1
million.
Insurance
Program - The Company’s insurance program for medical, general liability,
workers compensation and property is provided through CSC and
WTC. CSC allocates to the Company the cost of third party insurance
coverage and WTC allocates an estimated cost of the self-insured portion of the
coverage (up to $1,000,000 of general liability and workers compensation
claims). The rates used for the self-insured portion are actuarially
determined based on historical experience of paid claims for all of CSC’s
operations. The Company was charged $0.3 million and $0.9 million by
CSC during the years ended December 31, 2008 and 2007, respectively and $0.1
million by WTC during both of the years ended December 31, 2008 and 2007 for the
above insurance costs.
Income
Taxes - The Company is a pass-through entity for federal and state income
tax purposes, and therefore, its tax attributes flow through to its
owner. As a result, the accompanying statement of operations shows no
income tax expense.
Gaming
Taxes - The Company must remit gaming taxes to the State of Louisiana
based on a rate of 21.5% of adjusted gross receipts, as defined in the
regulations. Such taxes are included in gaming taxes and licenses expenses in
the accompanying statement of operations.
Contingencies
- The Company is subject to various litigation claims and assessments that arise
in the ordinary course of its business. Based upon information presently
available, management believes that resolution of such matters will not likely
have a material adverse effect on the financial position, results of operations
or cash flows of the Company.
Recently Issued
Accounting Standards— In June 2009, the Financial Accounting
Standards Board (“FASB”) issued Statement of Financial Accounting Standards
(“SFAS”) No. 168, The FASB
Accounting Standards Codification TM
and the Hierarchy of
Generally Accepted Accounting Principles (“GAAP”) (“SFAS 168”). The
purpose of the new standard is to codify the various sources of U.S. GAAP into a
single source and provide a consistent framework for determining what accounting
principles should be used when preparing U.S. GAAP financial statements.
Previous guidance did not properly rank the accounting literature. The new
standard is effective for interim and annual periods ending after September 15,
2009. The adoption of SFAS 168 is not expected to have a material effect on the
Company’s financial statements.
In May
2009, the FASB issued SFAS No. 165, Subsequent
Events. The purpose of the new statement is to establish
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. The new standard is effective for interim or
annual financial periods ending after June 15, 2009. The adoption of
SFAS No. 165 is not expected to have a material effect on the Company’s
financial statements.
In April
2008, the FASB released staff position (“FSP”) No. 142-3, Determination of the Useful Life of
Intangible Assets. The FSP requires entities to disclose
information for recognized intangible assets that enable users of financial
statements to understand the extent to which expected future cash flows
associated with intangible assets are affected by the entity’s intent or ability
to renew or extend the arrangement associated with the intangible
asset. The FSP also amends the factors an entity should consider in
developing the renewal or extension assumptions used in determining the useful
life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible
Assets. The FSP will be applied prospectively to intangible
assets acquired after the FSP’s effective date, but the disclosure requirements
will be applied prospectively to all intangible assets recognized as of, and
after, the FSP’s effective date. The FSP is effective for fiscal
years beginning after December 15, 2008, with early adoption
prohibited. The Company adopted FSP No. 142-3 on January 1, 2009 and
the adoption did not have a material effect on the Company’s financial
statements.
In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No.
133 (“SFAS 161”). SFAS 161 requires, among other things, enhanced
disclosure about the volume and nature of derivative and hedging activities and
a tabular summary showing the fair value of derivative instruments included in
the balance sheet and statement of operations. SFAS 161 also requires expanded
disclosure of contingencies included in derivative instruments related to
credit-risk. SFAS 161 is effective for fiscal years and interim periods
beginning after November 15, 2008. The Company adopted SFAS 161 on January 1,
2009 and the adoption did not have a material effect on the Company’s financial
statements.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS
141R”). SFAS 141R significantly changes the way companies account for business
combinations and will generally require more assets acquired and liabilities
assumed to be measured at their acquisition-date fair value. Under SFAS 141R,
legal fees and other transaction-related costs are expensed as incurred and are
no longer included as a cost of acquiring the business. SFAS 141R also requires,
among other things, acquirers to estimate the acquisition-date fair value of any
contingent consideration and to recognize any subsequent changes in the fair
value of contingent consideration in earnings. In addition, restructuring costs
the acquirer expected, but was not obligated to incur, will be recognized
separately from the business acquisition. SFAS 141R applies to the Company
prospectively for business combinations occurring on or after January 1, 2009.
The Company expects SFAS 141R will have an impact on accounting for business
combinations, but the effect will be dependent upon any potential future
acquisition.
In
February 2008, the FASB issued FSP No. 157-2, Effective Date of FASB Statement
No. 157, which amends SFAS No. 157 by delaying its effective
date by one year for non-financial assets and non-financial liabilities, except
for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis. Therefore, beginning on January 1, 2009, this
standard applies prospectively to fair value measurements of non-financial
assets and non-financial liabilities. The Company adopted FSP No. 157-2 on
January 1, 2009 and the adoption did not have a material effect on the Company’s
financial statements.
3.
Property and Equipment
Property
and equipment at December 31, 2008 and 2007 is summarized as follows (in
thousands):
|
2008
|
2007
|
|||||||
|
Riverboat,
barge and ramps
|
$
|
33,092
|
$
|
32,986
|
||||
|
Gaming
equipment
|
11,981
|
11,543
|
||||||
|
Furniture
and equipment
|
3,638
|
3,523
|
||||||
|
Land
improvements
|
1,240
|
1,156
|
||||||
|
Other
|
43
|
18
|
||||||
|
49,994
|
49,226
|
|||||||
|
Less
accumulated depreciation
|
(7,390
|
)
|
(2,665
|
)
|
||||
|
42,604
|
46,561
|
|||||||
|
Land
|
2,120
|
2,120
|
||||||
|
Property
and equipment, net
|
$
|
44,724
|
$
|
48,681
|
||||
Depreciation
and amortization expense during the years ended December 31, 2008 and 2007 was
$4.7 million and $2.7 million, respectively.
4.
Intangible Assets
Intangible
assets at December 31, 2008 and 2007 consists of the following (in
thousands):
|
2008
|
2007
|
|||||||
|
Gaming
License – Non-Amortizing
|
$
|
10,613
|
$
|
10,613
|
||||
|
Gaming
License – Amortizing
|
112
|
112
|
||||||
|
Accumulated
amortization
|
(81
|
)
|
(58
|
)
|
||||
|
Intangible
assets, net
|
$
|
10,644
|
$
|
10,667
|
||||
Amortization
expense related to intangible assets was less than $0.1 million in both 2008 and
2007. Estimated amortization expense for intangible assets for each
of the next two years is less than $0.1 million.
5.
Long-Term Debt
During
2005, the Company and certain other co-borrower affiliated companies borrowed a
total of $200 million under a Credit Facility which provided for a Term Loan A
borrowing of $100 million for the purchase of the Company on June 8, 2005 and
another casino owned by WTC, retirement of existing debt, financing costs and
other corporate purposes, and a Term Loan B borrowing of $100 million for the
purchase of another casino owned by WTC and financing costs. The
Company’s allocated portion of Term Loan A was $25.5 million which equaled the
purchase price for the Company and related costs. However, since the
Company was a co-borrower under the Credit Facility, the entire outstanding
balance had been recorded as a long-term debt with an adjustment to member’s
equity. The Credit facility also provided for a revolving loan of up
to $50 million, none of which was drawn at December 31, 2006. Term
Loan A and B were repaid January 3, 2007 with the proceeds of the borrowings of
Tropicana Entertainment, LLC, a sister company also ultimately owned by
WTC. At that time of the repayment an adjustment to member’s equity
of $195.5 million was recorded to reflect WTC’s repayment of Term Loan A and
B.
6. Related Party
Transactions
CSC has
guaranteed the Company’s performance under surety bonds amounting to $0.3
million at December 31, 2008 and 2007.
CSC
provides various administrative and accounting services to the Company under
administrative service agreements. CSC charged the Company $0.1
million for these services for both of the years ended December 31, 2008 and
2007.
The
Company has various dealings with CSC and its subsidiaries, including shared
payroll and benefit services, insurance and payments to common
vendors. The amounts allocated to the Company related to these
transactions and services are based on actual amounts attributable to the
Company’s operations. As of December 31, 2008 and 2007, CSC and its
subsidiaries owed the Company $2.0 million and $2.8 million,
respectively.
At
December 31, 2008 and 2007 the Company owed WTC, the Company’s ultimate parent,
$0.1 million and $12.6 million, respectively, for advances for start-up,
operational and other costs, and construction costs that were made to the
Company. In addition, at December 31, 2007, Tropicana Entertainment,
LLC, a sister company, and its subsidiaries owed the Company $2.7
million primarily related to slot machines and other gaming equipment that was
transferred to these casinos following Hurricane Katrina (Note
8). Also, see Note 9 for a further description of related party
activity with Tropicana Entertainment, LLC.
7.
Lease Commitments
In 2007,
the Company has entered into an agreement with the Parish of St. Mary to permit
the berthing of its riverboat casino in Amelia, Louisiana. The
agreement expires in May 2017. The agreement provides for percentage
fees based on the level of net gaming revenue as follows - first $60 million -
2.5%; $60 to $96 million - 3.5%; greater than $96 million - 5.0%.
The
annual minimum fee due under the agreement is $1.5 million, which was due on the
opening date of the casino and on the first day of June of each year
thereafter. The Company paid the minimum rent in 2008 and 2007 as
revenues were below the threshold for incurring additional fees.
The
Company has other operating leases for equipment and space. Rent
expense for these leases was $0.3 million and $1.4 million for the years ended
December 31, 2008 and 2007, respectively.
Future
minimum rental payments required under operating leases and the minimum fee of
$1.5 million under the berthing agreement described above that have initial or
remaining non-cancelable lease terms in excess of one year are as follows (in
thousands):
|
2009
|
$
|
1,668
|
||
|
2010
|
1,577
|
|||
|
2011
|
1,551
|
|||
|
2012
|
1,540
|
|||
|
2013
|
1,540
|
|||
|
Thereafter
|
5,204
|
|||
|
Total
|
$
|
13,080
|
8.
Casualty Loss – Hurricane
On August
28, 2005, Hurricane Katrina struck the Gulf Coast and damaged the Belle of
Orleans casino riverboat. The riverboat sustained substantial damage
and as a result had to be substantially rebuilt. The riverboat was
out of service from August 28, 2005 until May 18, 2007, when it reopened in
Amelia, Louisiana as the Amelia Belle Casino.
In
addition, the Company leased land and docking facilities for its riverboat
casino when it was berthed in New Orleans, Louisiana prior to Hurricane
Katrina. The lease provided for quarterly rent of $0.4 million plus
monthly rental of 5% of gross revenue subject to a minimum of $0.1
million. The lease was to expire in 2013. The Company, on
the advice of counsel, suspended the rent payments due to the impairment of the
leased facility damaged by Hurricane Katrina. The landlord filed suit
against the Company for unpaid rent, future rent and damages caused to the
leased facilities by the Company’s riverboat. The Company filed
claims with its insurance carriers for the physical damage and expenses related
to the riverboat. The claims were settled in 2008.
During
2008, the Company received insurance proceeds of approximately $9.9 million for
physical damage and for rent
claims and at December 31, 2008 had an insurance receivable of $3.7 million
related to insurance claim settlements for rent claims. In March 2009, the
Company reached a settlement with the former landlord mentioned above, which
resulted in the Company recognizing a liability of $7.4 million as of December
31, 2008. In March 2009, the insurance receivable of $3.7 million was
received and the lease liability was paid by the
Company.
The
following table presents information related to hurricane expenses as detailed
above:
|
Net
book value of written-off damaged or destroyed fixed
assets
|
|
$
|
2,200
|
|
|
Clean
up, legal, and remediation expenses
|
|
3,357
|
||
|
Insurance
proceeds for property damage
|
|
(2,000
|
)
|
|
|
Total
hurricane and related expenses, net for the years ended December 31,
2005
|
|
3,557
|
||
|
Net
book value of written-off damaged or destroyed fixed
assets
|
|
7,700
|
||
|
Clean
up, legal, and remediation expenses
|
|
1,907
|
||
|
Insurance
proceeds for property damage
|
|
(22,625
|
)
|
|
|
Total
hurricane and related expenses, net for the years ended December 31,
2006
|
|
(13,018
|
)
|
|
|
Clean
up, legal, and remediation expenses
|
|
930
|
||
|
Insurance
proceeds for property damage
|
(10,178
|
)
|
||
|
Total
hurricane and related expenses, net for the years ended December 31,
2007
|
|
(9,248
|
)
|
|
|
Clean
up, legal, and remediation expenses
|
220
|
|||
|
Settlement
with former landlord
|
7,400
|
|||
|
Insurance
receivable for rent claims
|
(3,706
|
)
|
||
|
Insurance
proceeds for rent claims
|
(3,000
|
)
|
||
|
Insurance
proceeds for property damage
|
(6,939
|
)
|
||
|
Total
hurricane and related expenses, net for the years ended December 31,
2008
|
|
$
|
(6,025
|
)
|
9.
Related Party Bankruptcy Filing
Tropicana
Entertainment, LLC (TE) and its subsidiaries, a significant subsidiary of WTC,
the Company’s parent, filed for bankruptcy protection on May 5, 2008 which cases
are currently pending in the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”) in the jointly administered cases titled in re
Tropicana Entertainment, LLC et al, Case No. 08-10856 (KJC) (the “Tropicana
Cases”). As of the date of the bankruptcy filing, TE and its
subsidiaries owed the Company $2.7 million primarily related to slot machines
and other gaming equipment that was transferred to these other casinos following
Hurricane Katrina (see Note 8). The Company fully reserved
these related party receivables due to the uncertainty of collection from the
entities operating in bankruptcy. By orders dated March 6, 2009, the
Bankruptcy Court in the Tropicana Cases approved the Debtors’ Disclosure
Statement for the First Amended Joint Plan of Reorganization of Tropicana
Entertainment, LLC and Certain of Its Debtor Affiliates under Chapter 11 of the
Bankruptcy Court (the “Proposed Plan”). The Court set April 17, 2009
as the voting deadline and on May 5, 2009 the Proposed Plan was confirmed by the
Bankruptcy Court. The Proposed Plan indicates that no payments will
be made to the Company for these related party receivables. The
Company received certain casino management services from WTC employees who were
transferred to TE during 2008. The Company and WTC have made other
arrangements for these services and the Company does not currently rely on TE or
any of its subsidiaries for any casino or administrative services.
Prior to
bankruptcy of TE, the Company incurred costs of $0.3 million related to the
contemplated swap of the Company’s casino riverboat with another casino
riverboat held by TE. Subsequent to the bankruptcy of TE, this
project was terminated and the costs were written off and are included in
Administrative and General expenses in the accompanying Statement of Operations
and Member’s Equity.
The
Proposed Plan contemplates the establishment of a litigation trust (the
“Litigation Trust”) to pursue possible causes of action against certain entities
including WTC and certain of its affiliates, which may include claims for breach
of fiduciary duty, gross negligence and breach of contract. WTC
denies that there has been any breach of fiduciary duty, gross negligence,
breach of contract or other grounds on which the Debtors or the Litigation Trust
would have a legal claim against it and intends to vigorously defend against any
such claims and causes of action.
In
addition, WTC remains obligated for substantial amounts owed under a lawsuit
settlement with Park Cattle Company reached in April 2008. This
lawsuit related to certain leases between Park Cattle Company as Lessor, and WTC
and certain subsidiaries of TE, as Lessees. Although the Company was
not a party to this litigation and is not subject to the settlement agreement,
WTC as the Company’s parent, may authorize distributions from the Company to
partially fund obligations under the settlement agreement which total $125.0
million as of December 31, 2008. In 2009, the Company transferred
$12.0 million to WTC which was used to partially fund a payment totaling $50.0
million due on April 1, 2009, under this settlement agreement.
Other
than as described above, the Company is not affected by the bankruptcy of TE and
its subsidiaries or by the settlement with Park Cattle Company.
10. Subsequent
Events
CPNO has
entered into a definitive purchase agreement, dated June 18, 2009, with AB
Casino Acquisition, LLC, a wholly owned indirect subsidiary of Peninsula Gaming,
LLC (“PGL”) to sell 100% of the outstanding limited liability company interests
of the Company for $106.5 million, subject to certain
adjustments. The purchase agreement contains customary
representations, warranties, agreements and indemnification provisions for
transactions of this nature. The transaction is also subject to the
satisfaction of customary closing conditions, including PGL obtaining all
requisite gaming and regulatory approvals and financing.