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Tuesday, July 28, 1998
Beckers search for financing
The family that controls Arizona Charlie's seeks new capital after a $92.5 million loan is canceled.
By John G. Edwards
Review-Journal
An attorney for Arizona Charlie's Inc. Monday said the Decatur Boulevard casino is seeking alternative financing to avoid a takeover by billionaire financier Carl Icahn.
United Healthcare Financial Services of Los Angeles agreed last month to make a $92.5 million loan, allowing the Becker family to pay off bondholders as part of a bankruptcy court agreement. But the company now says it will not make the loan.
"It looks like they're backing out of it," said John Clemency, a Phoenix attorney for Arizona Charlie's.
Clemency said United Healthcare may be liable for damages involved in failing to make the loan. "The prospects are good United Healthcare will be called upon to satisfy any damages as a result of the loan not closing," Clemency commented.
Arizona Charlie's has been operating with Chapter 11 bankruptcy protection since November 1997. Bruce Becker, Arizona Charlie's president, blamed the financial problems on a failed effort to start a riverboat casino at Jefferson City, Mo. Missouri gaming regulators denied Becker's request for a license and seemed opposed even after a court ordered the regulators to reconsider.
Arizona Charlie's reached an agreement to pay off Ichan's Higher River Limited Partnership, an entity that controls the majority of Arizona Charlie's bonds.
The agreement provided that Icahn will gain control of the casino if the payment isn't completed by Friday.
The Becker family, however, will try to avoid a takeover by Icahn, Clemency said. "We've only started investigating alternative sources" of financing, Clemency said.
Station Casinos Inc. earlier was unsuccessful in proposing to buyout Icahn's bonds and takeover Arizona Charlie's. After news of the financing problem broke, Glenn Christenson, Station's chief financial officer, said Station "continues to evaluate the situation." He declined to elaborate.
The Las Vegas Sun quoted Michael Brown, an attorney for United Healthcare, questioning the accuracy of the Beckers' financial projections. "Their assumptions were highly suspect," he added.
"That is absolutely false," Clemency said. "I think (representatives of United Healthcare) want to cover their tracks."
A commercial real estate appraiser as well as Arizona Charlie's managers prepared a reliable financial forecast Clemency said.
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