Black Diamond Capital Management and Creditors File Involuntary Bankruptcy Petition Against Hollywood Casino Shreveport

Business Wire, Sept 13, 2004

GREENWICH, Conn. & SHREVEPORT, La. -- Black Diamond Capital Management L.L.C., a privately held investment management firm with approximately $5 billion under management, announced that two of its funds, together with other creditors, have filed an involuntary Chapter 11 bankruptcy petition against Hollywood Casino Shreveport (the "Company"). The Company has been in default on $189 million in bonds for 18 months; Black Diamond funds are now owed in excess of $30 million by the Company.

The Company recently announced its intention to be sold to subsidiaries of Eldorado Resorts, L.L.C. in a "prepackaged" Chapter 11 proceeding to be filed in the fourth quarter of this year. Steve Deckoff, Managing Partner of Black Diamond, said, "We have expressed to the Company our strong dissatisfaction as creditors with the flawed insider-controlled sale process that has resulted in the Eldorado transaction. We think this process needs to be reexamined now and that any future sale process should proceed in the full light of day under close supervision of the Bankruptcy Court and the Louisiana Gaming Control Board. We also believe that Shreveport, where the casino is located and where people have the greatest stake in the outcome, is the place where this should occur, instead of Dallas, Texas, as contemplated by the Eldorado transaction."

Hollywood Casino opened in 2000 with a total investment of $250 million. Under the Eldorado transaction creditors will be required to write off tens of millions of dollars in indebtedness. Eldorado will acquire its ownership stake for an investment of only $5 million which it will be entitled entirely to recoup in two years through required management fees of $2.5 million per year. Furthermore, the Company has agreed not to solicit other bids and to pay as much as $2 million to Eldorado if the Company sells to another bidder. According to Mr. Deckoff, "We believe that the Eldorado deal does not provide an adequate return to creditors, involves an inadequate and illusory investment by new ownership and unfairly shuts out other bidders. In fact, we have previously indicated our interest to be a bidder in a fair and open process and have partnered with a strong local management team to do so."

Robert Raley, an attorney for Black Diamond, said, "The casino is a valuable property which should be sold to a well-financed ownership group with a capable management team. The sale process should be open to all bidders and structured to produce the best result for creditors, employees and the local community served by the casino. We believe that the filing of the involuntary petition in Shreveport at this time will create the best opportunity for this objective to be achieved."