Greektown Holdings, L.L.C. Reports Fourth Quarter and Full Year 2013 Financial Results

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Greektown Holdings, L.L.C.

Feb 14, 2014, 04:30 ET

DETROIT, Feb. 14, 2014 /PRNewswire/ -- Greektown Holdings, L.L.C. ("Greektown" or the "company") today reported financial results for its fourth quarter and full year ended December 31, 2013.

  • Net revenues for the three months ended December 31, 2013 were $71.5 million compared to $76.9 million for the same quarter of 2012, a decrease of 7.1%.
  • Net loss for the quarter was $9.7 million compared to $9.5 million a year ago, inclusive of $36.4 million of fourth quarter 2013 income resulting from the reversal of the company's deferred tax liability associated with the previously-announced restructuring, and the resulting $42.1 million impairment of the company's goodwill.
  • Adjusted EBITDA(1) decreased to $12.4 million in the fourth quarter of 2013 from $15.3 million in the same quarter of 2012, exclusive of the $42.1 million goodwill impairment during the fourth quarter of 2013.
  • For the year ended December 31, 2013, the company generated net revenues of $305.8 million, net loss of $30.9 million and Adjusted EBITDA(1) of $56.0 million, compared to net revenues of $331.7 million, net loss of $23.8 million and Adjusted EBITDA(1) of $75.9 million for the year ended December 31, 2012.

Cash and cash equivalents were $37.2 million at December 31, 2013, compared to $49.4 million at December 31, 2012. The company's borrowing capacity under its existing revolving credit facility was approximately $28.6 million at December 31, 2013. As of February 14, 2014, the company has $20.6 million of borrowing capacity.  The company has engaged an investment bank and expects to begin discussions with investors relating to potential refinancing transactions in the near term that, subsequent to the refinancing, could result in additional secured indebtedness of the company. The company can provide no assurance that any refinancing transactions will occur.

The company's management has identified various strategic initiatives which are expected to result in cost savings and operational efficiencies, as well as enhanced guest experience and additional revenue opportunities.  Management believes that these initiatives, which have commenced and will continue to be implemented throughout 2014, would have resulted in a run-rate impact of approximately $10-$15 million of additional EBITDA for the year ended December 31, 2013.  Additionally, the company intends to commence a significant renovation of its casino, which will result in improvements to the floor plan, gaming equipment, amenities and overall guest experience. The company expects to invest approximately $125-$150 million to complete these renovations over 18-24 months from the time of commencement. The renovation is subject to available debt and equity financing and operating cash flows, and the company can provide no assurance that it will be completed within the expected time frame or at all.

In February 2014, the Board of Directors approved the sale of the company's Fort Street and Brush Street parking garages and two surface lots to affiliates of our owner, consistent with the receipt of a third party fairness opinion. The total proceeds are anticipated to be approximately $25 million.

"Under new, local ownership and with a cohesive approach to reinvestment, Greektown's operational and physical opportunities are substantial," said Mark Dunkeson, president and chief operating officer of Rock Gaming LLC, the casino-hotel's operator. "I am proud to be leading the Greektown team through this process and confident in our continued progress," he said.

 (1) EBITDA (earnings before interest, taxes, depreciation and amortization and other income/expense) and Adjusted EBITDA are measurements not in accordance with U.S. Generally Accepted Accounting Principles (GAAP) but are commonly used in the gaming industry as a measure of performance and as a basis for valuation of gaming companies. Adjusted EBITDA represents EBITDA adjusted to eliminate (i) a refund of prior year use taxes, (ii) ownership transition and termination benefit expenses and (iii) certain costs, fees and expenses related to a prior proposed refinancing of our Senior Secured Notes. EBITDA and Adjusted EBTIDA are supplemental financial measures used by management, as well as industry analysts, to evaluate our operations. However, EBITDA and Adjusted EBITDA should not be construed as alternatives to income from operations (as an indicator of our operating performance) or to cash flows from operating activities (as a measure of liquidity) as determined in accordance with GAAP. Not all companies calculate EBITDA or Adjusted EBITDA in the same manner. As a result, the company's EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures presented by other companies. 

About Greektown Holdings, L.L.C.
Greektown Holdings, L.L.C.  owns and operates, through its subsidiaries, Greektown Casino-Hotel. Located in downtown Detroit's historic Greektown Entertainment District, Greektown Casino-Hotel opened in November 2000 as the state's third commercial casino. Greektown Casino-Hotel expanded its gaming floor and developed a modern 400-room, 30-story hotel in February 2009. The urban casino employs 1,800 team members and features 2,850 slot machines, 63 table games, and a poker room, along with five restaurants, including a five-outlet food court, four bars and a VIP players' lounge.  Greektown Casino-Hotel has also partnered with 14 local restaurants to offer fine dining rewards to guests. For more information, visit www.greektowncasino.com.  

Safe Harbor Statement
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about capitalization and performance of Greektown and the expected results of Greektown's cost savings and operational efficiencies and their run-rate impact on EBITDA. All forward-looking statements involve risks and uncertainties. All statements contained herein that are not clearly historical in nature are forward-looking, and words such as "anticipate," "expect," "will," "continue," or other similar words or phrases are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in other press releases, written statements or documents filed with the Securities and Exchange Commission are subject to known and unknown risks, uncertainties and contingencies, and there can be no assurance that the expected benefits of our new projects will be realized. Many of these risks, uncertainties and contingencies are beyond Greektown's control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Any forward-looking statements in this release speak only as of the date of this release, and Greektown undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

Greektown Holdings, L.L.C.

Consolidated Balance Sheets

(In thousands, except share and per share data)


Successor

Predecessor

December 31,

December 31,

2013

2012

Assets

Current assets:

Cash and cash equivalents

$                     37,237

$                         49,442

Accounts receivable – gaming, less allowance for doubtful accounts of $220 and $236 in 2013 and 2012, respectively

628

710

Accounts receivable – other, less allowance for doubtful accounts of $178 and $163 in 2013 and 2012, respectively 

1,548

1,397

Inventories

432

458

Prepaid expenses

5,415

3,902

Prepaid Michigan Gaming Control Board annual fee

9,280

9,104

Prepaid municipal service fees

3,362

3,411

Deposits

175

1,632

Total current assets

58,077

70,056

Property, building, and equipment, net 

335,805

342,417

Other assets:

Financing fees - net of accumulated amortization of $8,530 in 2012

152

8,235

Deposits and other assets

30

30

Casino development rights 

177,700

117,800

Trade names - net of accumulated amortization of $2,130 in 2013

12,070

26,300

Rated player relationships -  - net of accumulated amortization of $2,655 and $34,500 in 2013 and 2012, respectively

15,045

34,500

Goodwill

81,011

110,252

Total assets

$                   679,890

$                       709,590

Liabilities and shareholders' equity 

Current liabilities:

Accounts payable

10,003

17,503

Accrued interest

25,202

25,125

Accrued expenses and other liabilities

11,436

9,858

Current portion of revolving credit facility

3,000

3,000

Total current liabilities

49,641

55,486

Long-term liabilities:

Other accrued income taxes

9,460

9,165

Leasehold liability

1,929

–

Revolving credit facility, less current portion

9,750

12,000

Senior secured notes - net

403,592

371,843

Obligation under capital lease

4,693

2,472

Deferred income taxes

–

16,821

Total long-term liabilities

429,424

412,301

Total liabilities

479,065

467,787

Shareholders' equity:

Series A-1 preferred stock at $0.01 par value;

1,688,268 shares authorized, 1,463,535 shares issued and outstanding at December 31, 2012

–

185,396

Series A-2 preferred stock at $0.01 par value;

645,065 shares authorized, 162,255 shares issued and outstanding at December 31, 2012

–

20,551

Series A-1 preferred warrants at $0.01 par value;

202,511 shares issued and outstanding at December 31, 2012

–

25,651

Series A-2 preferred warrants at $0.01 par value;

460,587 shares issued and outstanding at December 31, 2012

–

58,342

Series A-1 common stock at $1,045.00 par value;

4,354,935 shares authorized, 152,054 shares issued and outstanding at December 31, 2012

–

1

Series A-2 common stock at $0.01 par value; 645,065 shares authorized, no shares issued

–

–

Additional paid-in capital

–

14,429

Accumulated deficit

–

(62,567)

Membership interest

200,825

–

Total Greektown Superholdings, Inc. shareholders' equity/membership interest

200,825

241,803

Total liabilities and shareholders' equity /membership interest

$                   679,890

$                       709,590

Greektown Holdings, L.L.C.

Consolidated Statements of Cash Flows

(In Thousands)


Successor

Predecessor

Nine Months Ended December 31,

Three Months Ended March 31, 

Year Ended December 31,

2013

2013

2012

Operating activities 


Net loss 

$                    (19,731)

$                      (11,155)

$                      (23,795)

Adjustments to reconcile net loss to net cash provided by operating activities:


Depreciation and amortization

18,516

7,595

32,264

Amortization of finance fees and accretion of (premium)/discount on senior notes

(8,358)

2,007

7,540

Goodwill impairment

42,055

–

–

Deferred income taxes

(33,414)

1,682

6,727

Stock based compensation

871

198

777

Changes in current assets and liabilities:


Accounts receivable - gaming

(8)

90

24

Accounts receivable - other

114

(265)

(181)

Inventories

5

21

(60)

Prepaid expenses 

(3,105)

1,465

1,357

Deposits

1,457

-

(1)

Accounts payable

(4,697)

(2,803)

(1,121)

Accrued interest

12,524

(12,447)

62

Accrued expenses and other liabilities

(3,209)

10,106

503

Net cash provided by (used in) operating activities

3,020

(3,506)

24,096


Investing activities


Capital expenditures

(1,788)

(7,529)

(40,300)

Net cash used in investing activities

(1,788)

(7,529)

(40,300)


Financing activities


Borrowings under revolving credit facility

–

–

15,000

Payments on revolving credit facility

(2,250)

–

–

Financing fees paid 

(152)

–

(108)

Net cash (used in) provided by financing activities 

(2,402)

–

14,892


Net decrease in cash and cash equivalents 

(1,170)

(11,035)

(1,312)

Cash and cash equivalents at beginning of period  

38,407

49,442

50,754

Cash and cash equivalents at end of period

$                      37,237

$                        38,407

$                        49,442


Supplemental disclosure of cash flow information 


Cash paid during the period for interest

$                      25,354

$                        25,126

$                        50,268

Cash paid during the period for income taxes

$                                 -

$                                 -

$                                 -

Greektown Holdings, L.L.C.

Reconciliation of Net Loss to EBITDA (1)

(In thousands)






Successor

Predecessor

Successor

Predecessor

Three Months Ended

December 31, 

Three Months Ended

December 31, 

Nine Months Ended

December 31, 

Three Months Ended

March 31, 

Year Ended

December 31, 

2013

2012

2013

2013

2012

Net loss

$                        (9,733)

$                        (9,516)

$                   (19,731)

$                      (11,155)

$        (23,795)

Interest expense

9,916

14,603

29,866

14,762

58,121

Income tax (benefit)/expense

(36,338)

1,672

(33,193)

1,746

6,938

Depreciation and amortization

6,016

7,641

18,516

7,595

32,264

Goodwill impairment

42,055

-

42,055

-

-

Other expense/(income)

70

323

(85)

188

622

EBITDA (1)

$                        11,986

$                        14,723

$                     37,428

$                        13,136

$          74,150

 Use tax refund 

(1,048)

-

(1,048)

-

-

 Ownership transition and termination benefit expenses 

1,472

-

3,145

2,964

-

 Refinancing expense 

-

622

157

235

1,732

Adjusted EBITDA (1)

$                        12,410

$                        15,345

$                     39,682

$                        16,335

$          75,882





(1) EBITDA (earnings before interest, taxes, depreciation and amortization and other income/expense) and Adjusted EBITDA are measurements not in accordance with U.S. Generally Accepted Accounting Principles (GAAP) but is commonly used in the gaming industry as a measure of performance and as a basis for valuation of gaming companies. Adjusted EBITDA represents EBITDA adjusted to eliminate (i) a refund of prior year use taxes, (ii) ownership transition and termination benefit expenses and (iii) certain costs, fees and expenses related to a prior proposed refinancing of our Senior Secured Notes. EBITDA and Adjusted EBTIDA are supplemental financial measures used by management, as well as industry analysts, to evaluate our operations. However, EBITDA and Adjusted EBITDA should not be construed as alternatives to income from operations (as an indicator of our operating performance) or to cash flows from operating activities (as a measure of liquidity) as determined in accordance with GAAP. Not all companies calculate EBITDA or Adjusted EBITDA in the same manner. As a result, the company's EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures presented by other companies. 

SOURCE Greektown Holdings, L.L.C.