Projo 7 to 7 News Blog

Its owners fell behind in their debt payments in March 2008. At last report, they had $565 million in outstanding loans. Their revenue is stagnant, and they say they have not made enough to pay their bills. Their credit rating has been downgraded to "D," with one major rating-service agency citing the high probability of a bankruptcy.

A series of consent orders kept local contractors at bay, among them: Dimeo Construction, Arden Engineering Constructors, Century Drywall, Kenneth Castellucci & Associates, H.W. Ellis Painting Company, Delta Mechanical Contractors, J.L. Marshall & Sons, Aero Mechanical and Siemens Building Technologies.

Governor Carcieri and his advisors hired two international firms to advise them on the operations at Twin River.

The Willkie Farr & Gallagher law firm and the Blackstone Group, a leveraged-buyout firm, began working for the state in late June or early July, according to Gary Sasse, director of the state Department of Revenue, "to give advice on restructuring issues and other contingencies as they might develop."

State officials would not discuss the nature and progress of their efforts, except to acknowledge that Twin River's financial advisers from the New York-based Lazard Ltd. had been meeting privately with the state's financial team from the Blackstone Group in an attempt to work out a financial plan that safeguards the state's huge share of the video-slot revenue.

In the interim, Twin River's lenders agreed not to exercise their rights to try to seize the property or take any other action that might force Twin River into bankruptcy court for a period of time to give the owners a chance to get their financial house in order.

But that agreement lapsed Jan. 5, for reasons that remain unclear.

And Doyle today said the "the notification of the Governor's position was verbally transmitted by the Blackstone Group to BLB consultant, Lazard.''

Twin River is run by a holding company composed of Kerzner International, Starwood Capital Group and Waterford Group LLC. The company bought the Lincoln Park dog track in 2005, along with three greyhound racetracks and a horse track in Colorado, and then embarked on a $225-million renovation and expansion.

Today's news was greeted with concern by a spokesman for GTECH, which supplies many of Twin River's video-slots and runs the central communications system for the state Lottery.

Spokesman Robert Vincent said he was not altogether surprised that the state pulled back. "It's just my impression, but I don't think the governor has been comfortable with bailing out a facility primarily involved in gambling.''

In Italy for GTECH's annual meeting, he said a Twin River bankruptcy filing would almost certainly "negatively impact their operation,'' by forcing a reduction in spending on marketing, and potential layoffs, at a time when the Connecticut casinos are aggressively making a bid for the "core space'' where Twin River has its niche.

Where the big casinos used to pitch "the fantasy experience'' they offer, he said, their more recent marketing revolves around the notion they give good value, good promotions, good payoffs and "value-type meals.''

"If they are going into it saying a bankruptcy won't effect revenue, we have a hard time coming to that conclusion,'' he said.

Twin River's owners had no further comment, beyond Doyle's statement that: "We are disappointed that talks have broken down with the state.''

Carcieri's office issued this statement: "The State continues to believe that a consensual restructuring between BLB and its lenders would be in the best interest of all stakeholders. To that end, the State has been involved in discussions among the key parties over the last few months. After lengthy discussions, the State has decided that given the state's current fiscal situation, it is not prudent to enter into a transaction that would add hundreds of millions of dollars of debt to the State's balance sheet.''

Speaker Murphy issued this statement: "I remain hopeful that there can be a resolution. My main focus is to ensure that the state's revenue stream will remain strong."