Hollywood Casino Shreveport proposes plan of reorganization and disclosure statement

By Ellen Chang

Houston, March 4 - Hollywood Casino Shreveport and its bondholders committee proposed a plan of reorganization that would give bondholders 100% recovery, according to a Thursday filing with the U.S. Bankruptcy Court for the Western District of Louisiana.

Under the proposed plan, Eldorado, the owner of the Eldorado Hotel & Casino, will make a $5 million contribution as plan sponsor and receive 75% of the equity of the reorganized company.

In addition $140 million of new notes will be issued in exchange for Hollywood Casino Shreveport's old notes. In addition, noteholders will receive interests in Noteholder Newco, a company that will own a 25% non-voting interest in the reorganized company and will receive distributions on a preferred capital contribution of $20 million plus a preferred return of 13% a year.

By class, the treatment of claims is:

* The $81 million of first mortgage note secured claims in class 3 will receive an equal principal amount of new notes for a 100% recovery;

* The $24 million of senior secured note secured claims in class 4 will receive an equal principal amount of new notes for a 100% recovery;

* The $132.521 million of note deficiency claims (the $237.521 million owing under the first mortgage notes and senior secured notes less the secured portions in classes 3 and 4) in class 5 will receive $140 million of new notes less the amount distributed to classes 3 and 4 plus interests in Noteholder Newco for a 30.6% recovery;

* The $36 million of general unsecured claims in class 7 will receive one-third of their claim in cash for a 33.3% recovery;

* Old equity interests will receive nothing.

Hollywood Casino Shreveport said it rejected an alternative proposal for reorganizing the company from Black Diamond Capital Management LLC because it was concerned about licensing risk, because of the extra time needed to complete the Black Diamond plan, because the other bondholders do not support a reorganization that would require them to receive debt from a company controlled by Black Diamond, because it doubts the increase in value is as big as Black Diamond says and because there was no business plan or projections to allow it to determine the feasibility of the proposal.

Black Diamond on March 2 asked the bankruptcy court to terminate Hollywood Casino Shreveport's exclusive right to propose a plan of reorganization because it does not believe the company has maximized the value of the estates.

Hollywood Casino Shreveport owns and operates a riverboat casino and hotel complex located on the Red River in Shreveport, La. Black Diamond and other creditors filed an involuntary Chapter 11 case against the casino and resort company on Sept. 10, 2004. The Chapter 11 case number is 04-13259.

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