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CAPITAL LEASE OBLIGATION
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Dec. 31, 2014
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| CAPITAL LEASE OBLIGATION |
6. CAPITAL LEASE OBLIGATION
Rising Star Casino Resort Capital Lease. On August 16, 2013, our Indiana subsidiary Gaming Entertainment (Indiana) LLC, entered into a 10-year capital lease for the new hotel tower at Rising Star Casino Resort (the “Rising Star Lease Agreement”) with Rising Sun/Ohio County First, Inc., an Indiana non-profit corporation (the “Landlord”). The lease is not guaranteed by the parent company or any subsidiary other than Gaming Entertainment (Indiana) LLC. The 104-room tower, adjacent to the Rising Star Casino Resort, opened on November 15, 2013. The capital lease provides us with full management control and we, as the lessee, assume all responsibilities including maintenance and repair, revenues, expenses, profits and losses related to the hotel’s operations. The term of the Rising Star Lease Agreement is for 10 years from November 15, 2013, with the Landlord having a right to sell the hotel tower to us at the end of the term for $1 plus closing costs on the terms set forth in the Rising Star Lease Agreement. During the term, we have the exclusive option to purchase the new hotel tower at Rising Star Casino Resort at a pre-set price (the “Pre-Set Price”), based upon the project’s actual costs, reduced by the cumulative principal payments made by the Company during the lease term. Upon expiration of the term of the lease, if we have not exercised our option to purchase the hotel tower, we have the option to purchase the hotel for $1 plus closing costs. On January 1, 2014, we began paying a fixed monthly rent payment of approximately $77,500, which will continue throughout the term of the Rising Star Lease Agreement unless we elect to purchase the hotel before the end of the lease period. In the event of a default on the lease agreement, the Landlord’s recourse allows for them to take possession of the property, collection of rents as defined, the right to seek remediation for any attorneys’ fees, litigation expenses, and costs of retaking and re-leasing the property.
Future minimum lease payments and the present value of such payments related to the capital lease are as follows, as of December 31, 2014 (in thousands):
The current portion of our capital lease obligation is $0.7 million, which represents the minimum lease payments, less interest, to be paid over the next year. The capital lease obligation, net of current portion is $6.2 million.
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