Crossroads Gaming Resorts Ownership Changes AGAIN

[CJDaley]

Crossroads Ownership Changes AGAIN, Morgan Stanley Drops Out

Crossroads announced 11/6/ 06 that it had new ownership as of Oct 13, 2006.

Morgan Stanley dropped their 75% ownership and are replaced by Goldman Sachs and a subsidiary. Silver Point Capital, L.P. has committed to provide equity capital and Goldman Sachs Credit Partners L.P., an affiliate of Goldman, Sachs & Co., has committed to provide debt financing. Silver Point Capital specializes in hedge funds, high risk loans to the financially distressed.

Here are the changes in ownership.

Crossroads Gaming Resorts and Spa, L.P. – Category 2 Applicant

1. Crossroads Gaming GP, L.L.C. – General Partner, changed from MS Gaming 1% of Crossroads GP, Inc

2. Crossroads NewCo, L.L.C. – Limited Partner, 75% ownership (Silver Point Capital, L.P, .) changed from 74% MS PA Gaming Holdings, Inc (a subsidiary of Morgan Stanley.)

3. Heather Kutz - Limited Partner, 1.392% ownership, reduced from 1.97%

4. David LeVan - Limited Partner, 12.75% ownership, increased from 7.5%

5. Barbara Ernico - Limited Partner, .601% ownership, reduced from .86%

6. Robert Bales - Limited Partner, 1.114% ownership, reduced from 1.61%

7. Michael Serluco - Limited Partner, 1.203% ownership, reduced from 1.71%

8. James Quillen- Limited Partner, .735% ownership, reduced from 1.05%

9. Alan Hassman - Limited Partner, 1.114% ownership, reduced from 1.61%

10. Peter Ressler - Limited Partner, 1.392% ownership, reduced from 1.97%

11. Elizabeth Eelkema - Limited Partner, .579% ownership, reduced from .82%

12. Gary Wienken - Limited Partner, 1.203% ownership, reduced from 1.71%

13. Bonnie Wortman - Limited Partner, 1.247% ownership, reduced from 1.78%

14. Thomas Willer - Limited Partner, .557% ownership, reduced from .80

15. Jennifer LeVan - Limited Partner, 1.113% ownership, reduced from 1.61%

Susan Star Paddock, chair of No Casino Gettysburg, a grass roots group opposed to the proposal, said the changes are significant. “Why did Morgan Stanley drop out at this late date? Either Morgan Stanley let Goldman Sachs steal a deal they no longer wanted, or Goldman Sachs and Silver Point Capital picked up damaged goods.”

(Typically 'damaged goods' means that the company has to pay more for their financing.)

[Dignann]

Re: Crossroads Gaming Resorts Ownership Changes AGAIN

Morgan Stanley out of casino

By MEG BERNHARDT

Hanover Evening Sun
November 7, 2006

Morgan Stanley has withdrawn its support as the largest financial backer for Crossroads Gaming Resort and Spa, the proposed slots parlor near Gettysburg.

In its place, a Greenwich, Conn., private investment firm has committed $80 million in equity investment if Crossroads is licensed.

Crossroads also announced Monday that Goldman Sachs Credit Partners L.P., an affiliate of Goldman, Sachs & Co., will provide $270 million in debt financing. Crossroads will submit the changes to state gaming regulators this week, said spokesman David La Torre.

Neither La Torre nor a spokesman for Morgan Stanley said why the investment bank backed out. Morgan Stanley determined it wasn't the right deal for it at the time, its spokesman Mark Lake said.

Lake wouldn't comment on whether public opposition to the project contributed to Morgan Stanley's withdrawal, but La Torre said at no time did Morgan Stanley indicate it was because of the viability of the project.

The Pennsylvania Gaming Control Board is currently considering Crossroads' application for one of two stand-alone slots parlor licenses outside Pittsburgh and Philadelphia. There are five other competitors, and a decision is anticipated by the end of December.

The idea has caused controversy in Gettysburg, since it will be located just outside of town near the intersection of routes 15 and 30 in Straban Township. Local opposition group No Casino Gettysburg chairwoman Susan Star Paddock questioned why Morgan Stanley dropped out.

"Why did Morgan Stanley drop out at this late date? Either Morgan Stanley let Goldman Sachs steal a deal they no longer wanted, or Goldman Sachs and Silver Point Capital picked up damaged goods," Paddock said.

But La Torre said Crossroads had no problem finding equity.

"It just speaks to the credibility and potential of this project that two major players stepped in so quickly to embrace this project," La Torre said.

In an ownership list dated Oct. 13, 2006, the largest investor – with 75 percent of the venture – will be Silver Point Capital, L.P. Founded by former Goldman, Sachs & Co. partners, Silver Point Capital is a $6 billion private investment firm with more than 200 employees in offices in the United States and Europe, Crossroads said in a press release.

"We had no problem striking a deal with Silver Point and Goldman Sachs – the bluest of blue chips," La Torre said. "They see the incredible potential this project has and our ideal location. They moved quickly to come on board. Crossroads has never been stronger. We couldn't be more excited."

Goldman Sachs will be providing debt financing and will charge normal financing fees, so unlike Silver Point, it would not own part of Crossroads.

The estimated cost of the project has been bumped up to $350 million from $300 million, La Torre said, but there have been no changes to the plan approved by local Straban Township officials last month. The higher figure is simply because of the greater financing opportunities, La Torre said.

The Oct. 13 ownership list also includes adjusted figures for the private investors who make up the remaining 25 percent.

Crossroad's CEO David LeVan will now have a larger share – 12.75 percent, up from his previous 7.5 percent. The other investor shares were reduced.

No Casino Gettysburg members have questioned how much control LeVan would have had with only 7.5 percent, and Paddock said the increase doesn't change anything.

"He's still a minority investor in a bad idea," Paddock said.

Silver Point and Goldman Sachs representatives will come to a scheduled Dec. 4 hearing on the proposal before the Pennsylvania Gaming Control Board.

A Silver Point spokesman declined to comment on the deal, other than to confirm the Crossroads press release. He also wouldn't say if Goldman, Sachs & Co. has invested in Silver Point.

But La Torre was optimistic about the deal and the upcoming hearing:

"(This project is) everything you want if you're Pennsylvania and you're looking to generate revenue for property tax relief."


WHO OWNS THAT

Ownership list dated Oct. 13, 2006:

Crossroads Gaming GP, L.L.C. General Partner, nominal equity

Limited Partners:

Crossroads NewCo, L.L.C. 75% ownership (Silver Point Capital, L.P.)

David LeVan 12.75%

Heather Kutz 1.392%

Peter Ressler 1.392%

Bonnie Wortman 1.247%

Michael Serluco 1.203%

Gary Wienken 1.203%

Robert Bales 1.114%

Alan Hassman 1.114%

Jennifer LeVan 1.113%

James Quillen .735%

Barbara Ernico .601%

Elizabeth Eelkema .579%

Thomas Willer .557%

As announced in August:

MS PA Gaming Holdings Inc.* 74%

MS PA Gaming Holdings INc. also owns Crossroads GP Inc. 1%

David LeVan 7.5%

Heather Kutz 1.97%

Peter Ressler 1.97%

Bonnie Wortman 1.78%

Michael Serluco 1.71%

Gary Wienken 1.71%

Jennifer LeVan 1.61%

Robert Bales 1.61%

Alan Hassman 1.61%

James Quillen 1.05%

Barbara Ernico .86%

Elizabeth Eelkema .82%

Thomas Willer .80%

* MS PA Gaming Holdings Inc. is a subsidiary of Morgan Stanley.

http://www.eveningsun.com/localnews/ci_4616435

Eric