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COMMITMENTS AND CONTINGENCIES
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9 Months Ended |
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Sep. 30, 2014
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| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES |
8. COMMITMENTS AND CONTINGENCIES
Silver Slipper Casino Hotel Construction
On August 26, 2013, the Silver Slipper Casino entered into an agreement with WHD Silver Slipper, LLC related to construction of the six-story, 142-room Silver Slipper Casino Hotel (the “Construction Agreement”) being built between the south side of the casino and the waterfront, with rooms featuring views of the bay. Our future cash requirements include funding needs of approximately $1.9 million towards future construction costs and a total of $5.9 million in construction and financing costs have already been funded from available cash through the quarter ended September 30, 2014. A total of $7.8 million will be funded from available cash. The Silver Slipper Casino Hotel is scheduled for completion in early 2015 and is budgeted to cost approximately $17.8 million, excluding capitalized interest. In connection with the financing of the Silver Slipper Casino Hotel, on August 26, 2013, we entered into the First Lien Amendment and the Second Lien Amendment which amended certain provisions of these agreements. The First Lien Amendment modifications included a $10.0 million increase to the term loan portion of the First Lien Credit Agreement to $56.3 million, a 1% lower interest rate and an extended maturity date to June 29, 2016. We intend to finance $10.0 million of the construction cost of the Silver Slipper Casino Hotel with the proceeds of the increase in the term loan under our First Lien Credit Agreement. The $10.0 million term loan under the First Lien Credit Agreement remains undrawn and subject to covenants and other terms of the First Lien Credit Agreement. We expect to have fully funded the $7.8 million and to commence drawing on the $10 million 1st Lien Loan during the fourth quarter of 2014. Capital One and ABC Funding, LLC are collectively referred to as our (“Creditors”). In 2014, we capitalized $0.2 million in interest related to the construction of the Silver Slipper Casino Hotel.
Keeneland Association, Inc.
On February 26, 2014, we entered into an exclusivity agreement (“Exclusivity Agreement”) with Keeneland to own, manage, and operate instant racing and, if authorized, traditional casino gaming at race tracks in Kentucky, subject to completion of definitive documents for each opportunity. On June 12, 2014, we executed an amendment to the Exclusivity Agreement extending the term to June 30, 2019. In addition, we and Keeneland have a letter of intent that provides for an exclusive option to purchase the Thunder Ridge Raceway in Prestonsburg, Kentucky, subject to the completion of definitive documents and the approval of the Kentucky Horse Racing Commission, including the approval to transfer the racing license to a to-be-constructed quarter horse racetrack near Corbin, Kentucky to be owned 75% by us and 25% by Keeneland.
Recent Company events have caused the Company and Keeneland to evaluate the nature and scope of their ongoing relationship. We and Keeneland are currently in discussions as to the terms and conditions under which we may terminate the agreements between us and Keeneland.
Other items
We are party to a number of pending legal proceedings which occurred in the normal course of business. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations.
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