In the Matter of:                   

SHOW CAUSE HEARING                           File No. GTC-2008-004
FOR GREEKTOWN CASINO, L.L.C.,
CONCERNING THE SALE TRANSACTION
PROCESS IN THE 2005 DEBT TRANSACTION
ORDER (FILE NO. GTC-2005-006)

ORDER RESERVING THE BOARD'S RIGHT TO INVOKE THE SALE TRANSACTION PROCESS FROM THE 2005 DEBT TRANSACTION ORDER (FILE NO. GTC-2005-006) AND REQUIRING GREEKTOWN CASINO, L.L.C., TO PROVIDE FINANCIAL STATUS REPORTS AT FUTURE BOARD MEETINGS

This matter comes before the Michigan Gaming Control Board (Board) pursuant to a May 13, 2008 Board order requiring the Greektown Entities [1] to show cause why the Board should not invoke the sale transaction provisions in the Board's November 2005 Order Approving Debt Transaction, Supplier-licensing Exemption requests, and Eligibility, Suitability, and Qualification of Certain Key Persons of Greektown Casino, L.L.C. (the 2005 Debt Transaction Order). [2]

I.            Violation of the 2005 Debt Transaction Order

As a condition on the approval of the Debt Transaction described in that Order, the 2005 Debt Transaction Order requires Greektown Casino, L.L.C., (Greektown) and Greektown Holdings, L.L.C., (Greektown Holdings) to demonstrate their financial viability by meeting certain financial benchmarks during the time period that either of those entities is indebted under the Secured Credit Facility or the Senior Notes, both of which are components of the Debt Transaction approved in that Order.  The 2005 Debt Transaction Order further provides that if a required financial benchmark is not achieved, the Sault Ste. Marie Tribe of Chippewa Indians (Sault Tribe) may provide equity contributions to retroactively cure the deficiency in achieving the benchmark at any time before the end of 120 days after December 31 of the year in question.

As recounted in the Board's May 13, 2008 show cause order, File No. GTC-2008-002, Greektown Holdings did not satisfy the net debt/EBITDA ratio required for the fiscal year ending December 31, 2007.  Greektown Holdings recorded a net debt/EBITDA ratio of 7.23:1, which is in excess of the maximum of 6.25:1 set in the November 2005 Debt Transaction Order.  Moreover, the Sault Tribe did not contribute equity to cure the deficiency by the deadline of April 29, 2008.  Thus, the Greektown Entities are not in compliance with the 2005 Debt Transaction Order.

II.         The Sale Transaction Process

            As a consequence for violating a financial benchmark in the 2005 Debt Transaction Order, "the Board may notify Greektown in writing that the Sale Transaction process described [in the 2005 Debt Transaction Order] will take effect."  If the Board notifies Greektown that the Sale Transaction process will take effect, "Greektown must enter into a contract to transfer all interests in Greektown Casino (or Greektown Holdings may enter into a contract to transfer all interests in Greektown) to a transferee or transferees and the transferee(s) must file with the Board an application to acquire the interests, pursuant to the Act and Rules" within 180 days of the written notification.

III.       Show Cause Hearing                                           

            On May 29, 2008, after the Board issued the May 13, 2008 show cause order, several entities in the Greektown Casino ownership structure filed petitions for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Eastern District of Michigan, Southern Division. The Greektown Entities have supplied the Board with information concerning the Bankruptcy proceedings and have provided certain responses to the requests for information in the May 13, 2008 show cause order. Additionally, during the show cause hearing, the Board received information from its Executive Director, Board Staff, and others, including representatives of the Greektown Entities. 

ORDER

Having heard from all interested parties in this matter and otherwise being fully advised in the premises, the Board hereby orders the following:

1.         The Board takes under advisement the decision whether to invoke the Sale Transaction process by notifying Greektown Casino that the Sale Transaction process will take effect, as described in the 2005 Debt Transaction Order.  Nothing in this Order waives or otherwise affects any remedies available to the Board for violations of Board orders concerning the 2005 debt transaction originally approved in File No. GTC-2005-006.

2.         The Board orders Greektown Casino and Greektown Holdings to report to the Board at each of its regular public meetings, beginning in August 2008 and continuing until otherwise ordered, concerning the status of the following:

a.         The Bankruptcy Court proceedings;

b.         Their plans and the plans of other entities in their ownership structure to satisfy outstanding debts to creditors;

c.         Operational cost reductions and budgetary savings for the operating company;

d.         The financial status, revenues, and projections of the operating company;

e.         Their plans for reorganization;

f.          Any transfers of interest being contemplated;

g.         The construction of the hotel and permanent casino;

h.         Casino management board operations; and

i.            Compliance with the Development Agreement with the City of Detroit.

APPROVED AND ORDERED, THIS 10th DAY OF JUNE 2008.

STATE OF MICHIGAN

MICHIGAN GAMING CONTROL BOARD

______________________________
Damian S. Kassab, Chairman

______________________________
Hon. Benjamin J. Friedman

______________________________
Donald L. Robinson

______________________________
Barbara J. Rom

______________________________
Michael J. Watza

Received and Filed:

______________________________

Laurie Lander
Board Secretary