Indianapolis Downs files bankruptcy, secures $103.13 million DIP loan

By Caroline Salls

Pittsburgh, April 7 - Indianapolis Downs, LLC filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware.

According to a company news release, the company's facilities will continue to operate as usual during the restructuring process.

Indianapolis Downs said it has strong underlying fundamentals, operates on a cash positive basis and generates enough revenue to pay its operating expenses. However, the company said it has been operating with a significantly greater-than-expected debt burden and is unable to service its debt under current terms.

The company said its debt largely reflects a $250 million initial state-mandated license fee, as well as a high statutory tax rate.

Indianapolis Downs said it preferred to address the debt restructuring in a consensual and negotiated standstill period outside the court process and worked with its lenders to accomplish that goal.

However, the company said it was unable to negotiate "the necessary outcome" and faced expiration of the forbearance agreement on its loan.

Missed payment

Indianapolis Downs said in court documents that it missed a Nov. 1 interest payment on its senior notes.

The senior notes were subsequently accelerated, triggering defaults on the company's first-lien debt and subordinated notes.

"This filing is unlike many debt restructuring cases because Indianapolis Downs has steadily grown its revenue and market share since opening," chief restructuring officer Gregory F. Rayburn said in the release.

"Indiana Live! and Indiana Downs racino is an operationally profitable, but new, business that has not yet achieved its full potential.

"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.

"Most importantly, this process will provide Indianapolis Downs with the time we need to enhance our enterprise value and the value of our secured lenders' collateral."

DIP financing

In conjunction with the filing, Indianapolis Downs has secured $103.13 million in debtor-in-possession financing from a group led by Wells Fargo.

The facility provides for immediate access of up to $5 million and will lower the company's interest expenses, the release said.

Interest will be one-year Libor plus 400 basis points, with a 100 bps Libor floor.

The DIP loan will mature on the earliest of one year from the bankruptcy filing date, 35 days after the interim order if a final order has not been entered, the effective date of a plan of reorganization, 30 days after the plan confirmation if the plan has not taken effect, the closing of a sale of substantially all of the company's assets, upon prepayment in full and upon acceleration of the DIP loan obligations.

Debt details

According to court documents, Indianapolis Downs has $500 million to $1 billion in assets and $100 million to $500 million in debt.

The company did not list any unsecured creditors with claims of $1 million or more.

Oliver Racing, LLC holds 95.39% of the company's equity interests.

The company is represented by Polsinelli Shughart PC and Greenberg Traurig LLP.

Indianapolis Downs is a Shelbyville, Ind., racetrack, off-track betting and gaming company. The Chapter 11 case number is 11-11046.

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