Twin River files for Chapter 11 protection

PROVIDENCE—The owner of Rhode Island’s largest slot parlor, and one of the state’s biggest revenue sources, filed for bankruptcy protection Tuesday as it struggles to repay more than $500 million in debt.

UTGR Inc., owner of Twin River in Lincoln, filed for Chapter 11 bankruptcy, which allows a business to free itself from creditor lawsuits and reorganize its finances. The reorganization plan must be approved by a judge and by a majority of creditors.

The business is expected to remain open as it restructures its debt, though it hopes this summer to discontinue greyhound racing that the company says is costing it $10 million a year.

“The administration will support the repeal of the statutory requirement that the facility operate a dog track for a specific number of days each year or alternative mutually acceptable arrangement,“ said Gov. Don Carcieri.

A restructuring agreement outlined in court papers would wipe out roughly $290 million in debt while allowing the lenders to select a new operator. The state would also provide $11 million a year in promotional and marketing support.

The agreement is based on legislative approval of 24-hour gaming and other conditions.

“I believe this reorganization plan is the best solution under the circumstances and is in the best interest of all parties, particularly the taxpayers of Rhode Island,“ Carcieri said.

Twin River’s financial health is important to the state, which licenses the facility and receives about 60 cents for every dollar spent on the slot machines. The machines are expected to raise about $238 million for the state during the fiscal year ending this month, its third-largest revenue source behind the personal income tax and sales and use taxes.

State Sen. Ed O’Neill, D-Lincoln, said he is upset that the residents of Lincoln will not have a say in the 24-7 gambling, which could go into effect by the end of this month.

“At what point do the people of Lincoln have a say in what’s going on in their town?“ O’Neill said.

The Rhode Island Greyhound Owners Association decried the proposal to eliminate dog racing. It says the decision will put 225 people out of work.

“What we think this is, is really an issue of big banks versus local jobs and local tax revenue. The big banks today said that they would like to put in a provision or a piece of legislation to eliminate greyhound racing in the future at the facility. We think that’s a grave mistake,“ said Jennifer Bramley, a spokeswoman for the greyhound owners.

Twin River ran into financial trouble after its owners took on $565 million in debt to purchase the racetrack and gambling hall in 2005 and renovate it.

The company had warned earlier this month that it would file for bankruptcy unless it could renegotiate a deal with its lenders and the state. In its bankruptcy petition, Twin River estimated its liabilities as between $500 million and $1 billion.

Earlier this year, Carcieri’s administration broke off talks with Twin River officials who were seeking help because the governor felt the state could not afford to take on the facility’s debt. House lawmakers are expected to vote on a budget plan later this month that tries to close a massive budget shortfall with spending cuts and tax hikes.

BLB Investors LLC purchased the property in 2005 from Wembley PLC after its previous owners became entwined in a State House corruption scandal.

The dog track, then known as Lincoln Park, former General Manager Dan Bucci and Nigel Potter, former chief executive of Wembley PLC, were found guilty that year of conspiring to bribe then-House Speaker John Harwood. No bribe was ever paid, and the House speaker was never charged.

Constructed in the 1940s, Twin River is one of two state-licensed slot parlors in Rhode Island. It also competes with the larger Foxwoods and Mohegan Sun casinos in Connecticut.

NBC 10’s Jim Taricani contributed to this report.