Greektown Casino in default, Detroit says

DETROIT -- The city wants to negotiate a new deal with any new owner of Greektown Casino, a city attorney told a federal bankruptcy judge Tuesday.

Detroit does not want the casino to keep, and potentially transfer, its development and operating agreement to a buyer.

Furthermore, attorney Allan Slagel argued, Greektown Casino has defaulted on some of the contract terms. He said it has failed to build a theater; pay the city $663,000 in development costs; and never offered a public share offering to Detroit residents.

Companies, like Greektown, that are trying to emerge from bankruptcy generally can "assume" or "reject" existing contracts. The city is fighting in U.S. Bankruptcy Court Greektown's efforts to "assume" its development agreement with the city.

Charles Moore, a senior managing director at turnaround company Conway MacKenzie Inc, said Greektown must keep the agreement with the city to become eligible for a tax rollback that would improve the casino's annual bottom line by $15 million and make it much more attractive to potential buyers.

Moore said several potential buyers are interested in the casino, but most or all of their offers are contingent on Greektown getting its tax rollback.

Greektown, he said, pays 24 percent of its gaming revenue to the state and city in taxes, while its competitors, MGM Grand and Motor City, pay 19 percent.

The Michigan Gaming Control Board approved the tax rollbacks for the other two Detroit casinos after they completed the construction of required hotels last year, Moore testified. Greektown completed a 400-room hotel in February and is awaiting its tax rollback, Moore testified.

Before it will approve a tax rollback, the gaming board requires the casino to be in compliance with its development agreement for 30 consecutive days. If Greektown can't keep the agreement, it can't be in compliance, and can't get the tax rollback.