Bankruptcy

Bankruptcy: Solution for Two More Companies

A casino operator and a Caterpillar and Deere supplier seek protection under Chapter 11.
Stephen TaubMarch 23, 2009

A pair of companies in struggling industries filed for bankruptcy today. Herbst Gaming, a casino operator, and MMC Precision Holdings, which supplies metal products, have both reportedly sought protection under Chapter 11 of the U.S. Bankruptcy Code.

Herbst, which owns and operates 15 casinos, mostly in Nevada, filed for bankruptcy under a previously negotiated agreement with creditors, according to Bloomberg. The gaming company listed $1.24 billion in debt and up to $1.02 billion in assets for Herbst and its affiliates, according to the news service.

Under a restructuring plan announced on March 10, the company’s casino and slot-machine business will be divided into two holding companies. The founding Herbst family will get 90 percent of the new equity in the new slot company in exchange for the contribution of a new gaming-device license agreement, according to Bloomberg.

The restructuring plan also reportedly provides for conversion of all the company’s outstanding obligations under its Senior Credit Facility—currently about $847 million plus accrued and unpaid interest—into debt and equity of the reorganized companies. Bank lenders will get 100 percent of the new equity of the reorganized casino company. The reorganized casino outfit will own 10 percent of the new equity in the new slot-machine business.

For its part, MMC Precision Holdings, is seeking a buyer, according to Reuters. Citing the tight credit markets for the bankruptcy filing, the supplier of engineered metal products to companies like Caterpillar Inc. and Deere & Co. said the recession had cut its sales by a third over the past year, according to the news service.

The company said it has debts of $100 million to $500 million and assets of $50 million to $100 million, according to Reuters. The wire service noted that MMC said it had not made quarterly interest payments on some of its debt since 2007.

               

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