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July 29, 2008

Centaur credit ranked negatively

By Nancy Lowry

Standard & Poor’s Ratings Service this month ranked Centaur on CreditWatch with negative implications.

The update came the day after the Pennsylvania Gaming Control Board rejected Centaur’s request for a conditional license to open a 3,000-slot casino in Mahoning Township.

The board, which has been criticized for questionable license awards in Pittsburgh and the Poconos, is taking its time to complete background investigations of officials of the Indiana-based racing and gaming giant who will run the gaming aspect of the racetrack/casino complex planned for Lawrence County.

After obtaining the harness racing license through the Pennsylvania Harness Racing Commission, Centaur last fall negotiated a $995 million loan for a corporatewide renovation of holdings — including Hoosier Park in Anderson, Ind., and the proposed Valley View Downs in Mahoning Township.

Centaur had notified the gaming board in March and again in May that its funding, contingent on obtaining the slots license by July 15, could be jeopardized if the award was not made by then.

Now Centaur faces a questionable financial future following the collapse of the credit market.

According to Internet sources, Standard & Poor’s Credit Research analyzes corporate and municipal issues and debt obligations, offering insights into credit risks of structured finance deals by providing an independent view.

CreditWatch ratings appear following a deviation from an expected trend and when additional information is necessary to evaluate the current rating. A listing does not mean a rating change is inevitable. However, a “negative” means a rating could be lowered.



RATING EXPLAINED

Certified financial planner Thomas Andrews does not believe a potential rating revision will prohibit Centaur from borrowing funds.

“Everyone has their own rating system,” he explained. “Some use letters, others numbers or pluses and minuses.

“The credit market is difficult to enter at this time, but this would still be workable if Centaur can find someone with money,” Andrews said.

“Centaur’s problem is they didn’t do what they said they would do — that was to have the gaming license by July 15,” he said. “So in essence, they defaulted on their credit agreement.”

Centaur’s problems in Pennsylvania may be further complicated, Andrews said, “because the governor, who promoted gaming as the answer to property taxes, seems to have appointed an inept board and seems to have turned his back on the whole thing.

“He should be more involved to ensure that the revenues he promised that gaming would produce for Pennsylvania are coming in. As it is, licenses are not being awarded, casinos are not operating and no money is coming in.”



STILL INTERESTED

Centaur also continues to work toward a positive solution.

Responding to questions via e-mail, Susan Kilkenny, director of marketing and vice president of public relations for Centaur, said the corporation’s team continues to work diligently to renegotiate a financing package.

“At this time, (the rating) has no bearing on our ability to renegotiate our financing package,” her response said. “Placing Centaur on a CreditWatch list is not the equivalent to a downgrade in rating.”

Although details regarding the status of discussions are not available, Kilkenny indicated Centaur officials, “are in constant contact with our lending group to resolve this situation.”

“We deeply appreciate the strong local support shown to the project during the public impact hearing in May,” Kilkenny said, adding, “We remain fully committed to bringing the significant economic benefits of the project to western Pennsylvania.”



TAKING TIME

State Rep. Chris Sainato believes the gaming board will complete its investigation and award the slots license in September.

Sainato said he believes the investigators are under pressure from the gaming board to complete the investigation.

“That’s my gut reaction,” Sainato said. “By the September meeting they will be ready. The investigation will be complete.”

In the meanwhile, Sainato said, “Centaur tells me there is no problem with the application, it is just that the process is taking time. I am assured there is nothing on the part of Centaur that is standing in the way.”

He said he also believes that unless Centaur withdraws its application for the slots license, it is theirs for the taking.

“I’m relying on statements by Gov. Ed Rendell, who said this license is for western Pennsylvania,” Sainato said.

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