Maloof Money Part 1

JB_kings said:
If the Maloofs are in major trouble financially and need to sell the Kings, we might be seeing this play out now. The deal with Gerry Kamilos and the land swap seems to be a very complicated deal. But it is one the NBA is backing over some other proposals. The "WHY" might have more to do with "WHO" than "WHERE".

For example if the Maloofs had notified Stern of their intent to sell, Stern may have taken the front position for selling. Stern does not like his league's teams to be bought and moved unless all options have been exhausted. So with the Kings for sale and the arena situation in flux, he needs to have a complex plan to solve both. While Kamilos has never really shown public interest in owning the team, perhaps he would for the right price. And swinging a big development deal and future ownership with Kamilos might be enough to get him to come up with a complex plan.

If you look at it with the notion that the Maloofs are intent on selling and Kamilos is interested in buying and developing several of these properties. The mysteries of why this deal over others seems to come into focus more. The question is how much short on cash to pay off their Vegas debt and how much would controlling interest of the Kings cost Kamilos. Maybe the Maloofs get to play minority owners, but visibly running the team while Kamilos is the silent majority with focus on all the devlopments.

Really doesn't sound too far fetched when you stop and think.
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There is no indication they want to sell. They asked Stern to enter the arena fray, becasue the locals were making everything about the Maloofs and not discussing an arena on its own merits. It was an excellent move on their part to fade into the background on the arena issues.

As to why the land swap deal is at the head of the pack is becasue it is the only one that spells out a financing plan that does not involve raising taxes or significant public financial support. Its that simple.

Why does Kamilos want to be a part of it? Because they need a willing developer who is very interested in getting the Cal Expo site, which is an excellent location for development. Infrastructure already in place, a variety of close transportation options, located on the banks of the beautiful American River and very close to downtown. For a developer, it's a drool worthy site.

There's so many obvious reasons, there's really no need to delve into mysterious mechinations to see why the people involved would want to be involved and why it might be a doable deal for the city and even Cal Expo.

By the way, the Maloofs were never the billionaire playboys the Sacto Bee and other antagonists made them out to be. You have to remember that whatever the net worth was or is (we don't know the liabilites, only the assets) it is family wealth split amoung Ma Maloof and 5 siblings. So divide any net assets by at least 6. (Don't know actual percentages, of course.) Everything regarding the businesses is decided by the whole group.

Any individual one of them is not likely to come anywhere close to the individual wealth of Paul Allen, Mark Cuban or the new Russian owner of the Nets, among others.

Note: Forbes has both Cuban and Allen on their annual billionaire lists. No Maloofs. Actually Allen is one of the world's richest men. His arena ownership went bankrupt, by the way.
 
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kennadog said:
There is no indication they want to sell.
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True, but all of the numbers available to us appear to indicate they might need to.

You can only take the Maloofs at their word so much here. They have to keep a positive spin on this to keep the Palms image strong and/or avoid a hostile takeover. However, several stories refuted their explanation for selling the beer distributorship (which strains logic). The continued refrain of – we’re doing fine – despite lots of reports with numbers to the contrary starts to sound like “Ignore that man behind the curtain.”

If you take the numbers we were using from the Bee on the last page and plug in the new debet numbers on the Palms we just got ... there really isn't as much black ink as anybody would expect for the total value.
 
Larry David said:
True, but all of the numbers available to us appear to indicate they might need to.

You can only take the Maloofs at their word so much here. They have to keep a positive spin on this to keep the Palms image strong and/or avoid a hostile takeover. However, several stories refuted their explanation for selling the beer distributorship (which strains logic). The continued refrain of – we’re doing fine – despite lots of reports with numbers to the contrary starts to sound like “Ignore that man behind the curtain.”

If you take the numbers we were using from the Bee on the last page and plug in the new debet numbers on the Palms we just got ... there really isn't as much black ink as anybody would expect for the total value.
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I'm not saying they can't be forced to sell by financial circumstances. I just want to make sure everyone is clear that the Maloofs have given no voice to wanting to sell. Around these parts that's what tends to happen and you hear the old, "They always wanted to get out of Sacramento BS."

They had to sell the Rockets franchise after their dad died. When they bought the Kings majority interest, they said they waited for a long time to get back into the NBA and they were all ecstatic. I believe it would be a crushing blow to them to have to sell again. And then we could lose out team. We were lucky that the Maloofs did not want to move the team when they became majority owner.
 
The good news is that - getting a Sacramento arena done - would bost the value of the team. Thus, even if they might need to sell, the arena hopes are far from dead.

They clearly don't want to sell, but unless there is a game changer, it appears they could be forced to chose between their team and their casino - at least in their current stake/forms. Everything your wrote about selling the Kings would also apply to the Palms.

Either way, this is about to become a lot more complex.
 
http://www.sacbee.com/2010/08/18/2965924/palms-casino-partner-claims-maloofs.html

Basically, says: (1) Party A says it’s worthless; and (2) Party B says they are doing better (couldn’t that simply mean better losses.” And they get somebody to say, it’s not worth zero. So, we don’t know what’ it’s worth. Thanks Bee.
Thanks. How about the fact that they’ve got a 350 million dollar loan due the same date relocation papers are due? Maybe we could focus on that fact? How does that 350 million dollar debt relate to the 2007 value? Is it in the math or no? Kinda matters a little.

It appears 2007 was after the moster 2006 fantasy tower, but before the 2008 condo mess that is Palms Place. So, very unclear.
 
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http://www.sacbee.com/2010/09/03/3002492/sacramento-loan-to-kings-changed.html

Bee story on the loan


Two things. First, this will get a ton of local press – but it’s not a big deal. Doesn’t look great, but practically there isn’t any difference.

I think the more interesting point – missed yet again by the bee – is that the Maloofs might not have a ton of equity in the Kings.

Per Forbes, the Kings are worth $305 million. Of course they value the Natomas arena and land at $69 million. They city says it’s worth $47 and the Kings are petitioning for a value of $23 million. Anybody that’s owned a home knows what’s going on there. Worst case, we’ll knock the Forbes value down to $260.

Even assuming the Kings took all of the NBA credit, that’s $125 million of debt. If you add the max to the citys’ loan that’s $193 million. The city is covered, because no NBA team is selling for less than $200 million. I can see the public griping that they were moved to 2nd without knowledge or a public vote, but it’s not a bad deal and the city got consideration for it.

I’m sure the NBA doesn’t/doesn’t want to loan owners money for non-NBA reasons, but logically the Kings have drawn a fair amount from this line of credit either way. First, their primary issue is cashflow – not total assets. It’s the reason the Monarch’s went away the beer distributorship was sold. With attendance down, revenue is an issue. As we’ve seen from the Marlin’s story, it’s pretty easy to work with the numbers. Thus, even if the NBA was demanding some proof the cash was solely for NBA purposes – the Maloofs could pull the max if they wanted/needed. Ie – fund the team with NBA money and use your cash to plug holes elsewhere.

Right now, we are just reading the tea leaves. I’m guessing the city will approve this – but they might require the Maloofs to disclose how much of the NBA’s $125 million they’ve tapped into. That could get heated and messy. If it’s up near 100 million, that will paint an entirely new picture of the Maloofs – yet again.

The beer is gone. Station is reporting to the SEC that the Palms is essentially a wash on a balance sheet. I assumed the appreciation of the Kings made them a huge asset. But perhaps as much as 75% of the Kings is financed.

If that’s the case, it throws a lot of cold water on the – the Maloofs might have to sell the Kings to save the Palms idea. Unlike the Palms, the Kings are a lock to appreciate over the years and it’s a very low interest loans.

At the same time, the Maloofs would be a in a really shaky spot. We'll see where this goes.
 
Larry David said:
http://www.sacbee.com/2010/09/03/3002492/sacramento-loan-to-kings-changed.html

Bee story on the loan


Two things. First, this will get a ton of local press – but it’s not a big deal. Doesn’t look great, but practically there isn’t any difference.

I think the more interesting point – missed yet again by the bee – is that the Maloofs might not have a ton of equity in the Kings.

Per Forbes, the Kings are worth $305 million. Of course they value the Natomas arena and land at $69 million. They city says it’s worth $47 and the Kings are petitioning for a value of $23 million. Anybody that’s owned a home knows what’s going on there. Worst case, we’ll knock the Forbes value down to $260.

Even assuming the Kings took all of the NBA credit, that’s $125 million of debt. If you add the max to the citys’ loan that’s $193 million. The city is covered, because no NBA team is selling for less than $200 million. I can see the public griping that they were moved to 2nd without knowledge or a public vote, but it’s not a bad deal and the city got consideration for it.

I’m sure the NBA doesn’t/doesn’t want to loan owners money for non-NBA reasons, but logically the Kings have drawn a fair amount from this line of credit either way. First, their primary issue is cashflow – not total assets. It’s the reason the Monarch’s went away the beer distributorship was sold. With attendance down, revenue is an issue. As we’ve seen from the Marlin’s story, it’s pretty easy to work with the numbers. Thus, even if the NBA was demanding some proof the cash was solely for NBA purposes – the Maloofs could pull the max if they wanted/needed. Ie – fund the team with NBA money and use your cash to plug holes elsewhere.

Right now, we are just reading the tea leaves. I’m guessing the city will approve this – but they might require the Maloofs to disclose how much of the NBA’s $125 million they’ve tapped into. That could get heated and messy. If it’s up near 100 million, that will paint an entirely new picture of the Maloofs – yet again.

The beer is gone. Station is reporting to the SEC that the Palms is essentially a wash on a balance sheet. I assumed the appreciation of the Kings made them a huge asset. But perhaps as much as 75% of the Kings is financed.

If that’s the case, it throws a lot of cold water on the – the Maloofs might have to sell the Kings to save the Palms idea. Unlike the Palms, the Kings are a lock to appreciate over the years and it’s a very low interest loans.

At the same time, the Maloofs would be a in a really shaky spot. We'll see where this goes.
Click to expand...

Ya know I read the artice and basically all they needed to print was 1 paragraph at the end.


"He noted the Kings previously had a line of credit with their own bank worth $30 million that also was situated ahead of the city's then $20 million stake in the Kings. That line was canceled when the NBA made money available.

"The league said we can get a better facility with better rates if we pool our interests," Rinehart said."


So basically they replaced one line of credit with another at a better interest rate which was already in front of the city loan.
 
It should be noted the Hornets had a much higher payroll issue than the Kings. They were paying the lux tax. (Then again, they aren't dealing with the Palms issue.)

But if you want to see how a team can't draw enough fans to not only cover the yearly expenses, but the debt service on the NBA's line of credit, this is exhibit A.

http://deadspin.com/5708313/the-new-orleans-hornets-sad-financial-documents/gallery/

Shinn is basically handing over the keys because the league already owns most of the team.
 
Larry David said:
http://www.sacbee.com/2010/09/03/3002492/sacramento-loan-to-kings-changed.html

Bee story on the loan


Two things. First, this will get a ton of local press – but it’s not a big deal. Doesn’t look great, but practically there isn’t any difference.

I think the more interesting point – missed yet again by the bee – is that the Maloofs might not have a ton of equity in the Kings.

Per Forbes, the Kings are worth $305 million. Of course they value the Natomas arena and land at $69 million. They city says it’s worth $47 and the Kings are petitioning for a value of $23 million. Anybody that’s owned a home knows what’s going on there. Worst case, we’ll knock the Forbes value down to $260.

Even assuming the Kings took all of the NBA credit, that’s $125 million of debt. If you add the max to the citys’ loan that’s $193 million. The city is covered, because no NBA team is selling for less than $200 million. I can see the public griping that they were moved to 2nd without knowledge or a public vote, but it’s not a bad deal and the city got consideration for it.

I’m sure the NBA doesn’t/doesn’t want to loan owners money for non-NBA reasons, but logically the Kings have drawn a fair amount from this line of credit either way. First, their primary issue is cashflow – not total assets. It’s the reason the Monarch’s went away the beer distributorship was sold. With attendance down, revenue is an issue. As we’ve seen from the Marlin’s story, it’s pretty easy to work with the numbers. Thus, even if the NBA was demanding some proof the cash was solely for NBA purposes – the Maloofs could pull the max if they wanted/needed. Ie – fund the team with NBA money and use your cash to plug holes elsewhere.

Right now, we are just reading the tea leaves. I’m guessing the city will approve this – but they might require the Maloofs to disclose how much of the NBA’s $125 million they’ve tapped into. That could get heated and messy. If it’s up near 100 million, that will paint an entirely new picture of the Maloofs – yet again.

The beer is gone. Station is reporting to the SEC that the Palms is essentially a wash on a balance sheet. I assumed the appreciation of the Kings made them a huge asset. But perhaps as much as 75% of the Kings is financed.

If that’s the case, it throws a lot of cold water on the – the Maloofs might have to sell the Kings to save the Palms idea. Unlike the Palms, the Kings are a lock to appreciate over the years and it’s a very low interest loans.

At the same time, the Maloofs would be a in a really shaky spot. We'll see where this goes.
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Larry - Most of your posts here are rather intelligent. I find you occasionally inciteful with your opinions, so let me ask you this - do you have any information that actually tells you how much the Maloofs were leveraged going into the Kings' purchase? Or - how much the Kings had to draw down on the line of credit that was offered to them by the league? You're using assumptions here and when analyzing someone's finances, you can't just assume the worst case scenario unless you have an agenda you're trying to drive (in your case, I think for whatever reason, you want the Kings gone).
 
cfechter said:
Larry - Most of your posts here are rather intelligent. I find you occasionally inciteful with your opinions, so let me ask you this - do you have any information that actually tells you how much the Maloofs were leveraged going into the Kings' purchase? Or - how much the Kings had to draw down on the line of credit that was offered to them by the league? You're using assumptions here and when analyzing someone's finances, you can't just assume the worst case scenario unless you have an agenda you're trying to drive (in your case, I think for whatever reason, you want the Kings gone).
Click to expand...

Have you been following the near collapse of the world economy and the causes behind it?

http://mysite.verizon.net/vzeqrguz/housingbubble/las_vegas.html

The Maloofs went all in on the Palms during the bubble. And they did it with credit. I think it's less an "agenda" and more that he's the bearer of undesirable news.
 
Circa_1985_Fan said:
And it's not just the Maloofs that lost $$$ in this economy, ALL of Las Vegas has lost money.
Click to expand...

All of everywhere lost money, but Vegas was hit particularly bad. I just find it interesting that someone would assume Larry David has some ulterior motive. When you break down the Maloof's finances using some simple logic, you end up concluding that they're having a rough go of it.
 
mr. moustache said:
All of everywhere lost money, but Vegas was hit particularly bad. I just find it interesting that someone would assume Larry David has some ulterior motive. When you break down the Maloof's finances using some simple logic, you end up concluding that they're having a rough go of it.
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Indeed...the grass isnt always greener anywhere else...just because Vegas MIGHT get an arena(funded by the Harrah's Co.), they would have a hard time finding anymore $$$ to buy a pro sports franchise afterwards. And like I've been saying all along, I doubt it VERY seriously that the Maloofs would be looking to sell their team to their competitors.(but I dont think Stern's lifting the Vegas embargo any time soon, especially after the poor all-around showing in the Vegas All Star game a few years back)
 
mr. moustache said:
All of everywhere lost money, but Vegas was hit particularly bad. I just find it interesting that someone would assume Larry David has some ulterior motive. When you break down the Maloof's finances using some simple logic, you end up concluding that they're having a rough go of it.
Click to expand...
This is true but Larry does not seem willing to consider the possiblity that the Kings are of as much if not more value to the Maloofs than the Palms or that the Kings have a greater chance of being worth more in the future than the Palms will. His entire belief is that they will sell the farm to hold onto the Palms. The truth is nobody knows the full extent of their finances nor do they know everything that goes on in their heads and why they make one decision or another.
 
Heard on channel 40 tonight that investment bankers are lining up to take majority control of the palms in vegas because the maloofs were not able to refinance their debt in time. I really want to know how this will affect the kings.
 
fansinceday1 said:
Heard on channel 40 tonight that investment bankers are lining up to take majority control of the palms in vegas because the maloofs were not able to refinance their debt in time. I really want to know how this will affect the kings.
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Wow! That's not good news for the Maloofs to say the least. It's equivalent to having Notice of Defaut (NOD) filed on your house. You have some time (like 90-120 days) to cure it (pay up or refi) and if not you lose property to the bank. In this case, investment bankers are pulling the plug it would appear after deadline came and went consigning a commercial default. Unfortunately, for Maloof's they are past so-called "cure days" - so this is a flat out FORECLOSURE. There's no way this is good news for the Kings, because if your #1 cash cow is in trouble to that degree their entire empire is wobbly from top to bottom it's now rather apparent. Remember folks, the Sacramento Kings are LOSING money and have been for some time. It's still a substantial paper asset since it's worth more than Maloofs paid for the franchise twelve years ago but maybe they'll now simply have to sell to make ends meet - sooner rather than later.
 
http://www.bloomberg.com/news/2011-...o-take-controlling-stake-in-palms-casino.html
Leonard Green & Partners LP and TPG Capital are in talks to take a controlling stake in the Palms Casino Resort, a Las Vegas celebrity hangout, as owner George Maloof seeks to restructure the property’s debt, people with knowledge of the matter said.

The buyout firms acquired most of a loan backed by the casino and its hotel towers at a discount last year, and may take an equity stake in the first quarter as part of the restructuring, said three of the people, who asked not to be identified because the deliberations are private. No agreement has been reached and talks are continuing, the people said.

Maloof, who opened the Palms in 2001, may partner with Los Angeles-based Leonard Green and TPG to remain the operator with a reduced ownership stake, the people said. The property is backed by a revolving credit facility, originally for $400 million, that came due in October and wasn’t refinanced. The resort is located less than a mile off the Las Vegas Strip.
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Doesn't sound like total armageddon.
 
pdxKingsFan said:
http://www.bloomberg.com/news/2011-...o-take-controlling-stake-in-palms-casino.html

Doesn't sound like total armageddon.
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I disagree entirely. You're discounting that the Maloofs sold the beer company in order to meet last year's revolver. If all the Maloofs have left is the Kings, on which they are clearly losing money and also deeply leveraged, this...

Well, if your last name is something other than "Maloof", you're in great shape. But if your part of the Maloof family of Las Vegas and Sacramento, it's a collapse.

I tell you, man, March 1 is looming. And when it happens, it's going to be very quick. This is that same sinking feeling you get when the other team's running back has finally broken free, and the only thing between him and the goal line is the undersized rookie safety you brought in because of injuries to the rest of the DB's. All you can do is stand on the sideline and think, "Oh, boy, this isn't good."

40-30-25...

What makes this feel worse is it's the day after the Kings best home game this year, and maybe in 3 years.
 
I'm not discounting anything but there is a huge difference between foreclosing and shutting the Maloofs out entirely which was what the first report was and restructuring the debt where the investors will assume the equity that the debt represents and still allow the Maloofs a share plus maintaining day to day control of the operations.

And despite what we think we know we actually don't know if 100% of the proceeds of the beer company sale went into the Palms or if portions were given to other family members who got day to day income from the beer company and weren't involved with the casino got a cut.
 
Interesting to note that even with a minority stake in the Palms the family would still seem to have majority ownership of the restaurant and nightclub operations because that is a separate entity. Which lends creedence to my suspicion that first and foremost the family is concerned with the glamour end of these operations and has no intention of letting the Kings go to save the Palms.
 
pdxKingsFan said:
Interesting to note that even with a minority stake in the Palms the family would still seem to have majority ownership of the restaurant and nightclub operations because that is a separate entity. Which lends creedence to my suspicion that first and foremost the family is concerned with the glamour end of these operations and has no intention of letting the Kings go to save the Palms.
Click to expand...

I still say that "covenant breach" are two words you don't want to hear. I just can't see how I'm wrong on that one.
 
It's obviously not a good thing, my point was that the reports indicated that the investors are looking to work with the Maloofs and allow them to maintain some stake and management responsibilities rather than run them out and roll it into another entity.

Anyone following the Palms knew that the Maloofs were going to have to sink more money into the place if they wanted to save it, in this case it looks like they may be able to just write off their losses in exchange for the loss of equity but maintain a minority share. Sure it means they will never recoup their losses but it also means they might be able to stop the bleeding but still manage to maintain their celebrity ownership status and the perks that status entails - country club memberships, travel swaps, etc...
 
These stories aren’t very clear. In fact, it makes it appear that Green and TPG are – on the same page or even the same group. Looks to me like Green is trying to step in between hostile takeover by TPG.

I probably need to be corrected on several fronts, but let’s see if I’m understanding this.

Background
Palms opens in 2001. At that point Maloofs and partners (Palms) own 100% of the value and any small debt, if any, on it. Reports have Palms costing 265 to open.
Between 2005 and 2008, they expand with the big tower and Palms Place (the last project was high dollar condos, Las Vegas real estate, and a casino expansion – which are three things that are getting destroyed.)

Lender loans Palms 400, which is now due on March 1, 2011.

My numbers are fast and loose guesses, but let’s use them for context. Expansion reported at 600. 265 to start, let’s call the other 200 Palms money, and 400 loaned by Lender. Thus, a total of 865 has been spent on the casino, and Palms owns 54% free and clear.

Recent Developments
TPG owns Harrah’s and Caesars (Harrah’s). Green is a LA based big investment group, or something (LA Money).

In 2009, the Palms triggered some covenants in the loan. At which point Lender realizes they probably aren’t going to see 400 back. So, Lender starts selling the debt to Harrah’s at a discount. Palms didn’t repay or restructure before the original due date in October 2010. At this point, Harrah’s owns most of the loan and they bought it at a discount.

As a background, what makes the Palms special is not just the glitz, but the overall way they run it – the old Vegas way like dad did. Harrah’s runs it very corporate – from comps on up. Harrah’s runs the casinos they buy up. To put it another way, if Coke bought Rockstar energy drink … Rockstar doesn’t keep running the day to day operations of Rockstar. Coke bought the brand name and Coke runs it. (PS - I have no idea who owns Rockstar.)

Thus, Palms is now dealing with Harrah’s, not their lender, and Harrah’s appears to have a hostile takeover in mind.

Today’s News
Although it’s unclear, it appears that two options addressed by this story

(1) Unspoken option from story, whether by contract or default, Harrah’s takes majority ownership of the Palms. Unless the Palms pays off the debt by March 1, 2011, Harrah’s will own a majority of the place (at current value). And they aren’t going to let the Palms keep day to day control. Palms becomes silent minority owner.

(2) Palms, LA Money, and Harrah’s are all sitting down at the table. LA Money must see value in the Palms, and the way it’s run. The Palms wants to keep day to day control.
To push back against Harrah’s, LA Money must be taking the position of – Hey, we can front the money Palms needs if you want to play hardball Harrah’s. Under this play, LA Money owns most of the Palms, who would need to give up a lot more of what they currently own because LA Money pays full amount of loan, and everybody agrees it’s no longer worth that. Harrah’s makes a nice profit because they bought loan for less, but they doesn’t get any of the Palms.

In reality, the Palms and LA Money just want to have a combined majority share. So they are pushing for a three way split. Palms a minority owner, but they and LA Money agree George gets to keep running the place.

It looks like Palms isn’t going to be a majority owner of the casino very soon. The only remaining issues are the percentage of the share and control.
 
PDX, with Harrahs gunning for them and the amount of time it takes to make an NBA sale, I agree. The Maloofs aren't going to prop up Palms w/ Kings equity at this point.

After 3-1, they will still own the team. That's the good news, because I can't see another owner wanting to keep the team her. However, as a minority owner in a money losing casino, with no other profits and (by NBA standards) shallow pockets, the teams' ability to spend appears very limited. Still good news, but not all good news.
 
You're right Larry, after re-re-reading it it does look like there may be two competing proposals, one would be a Harrah's (actually now calling themselves Caesar's) complete takeover and the other would be the LA Money taking majority ownership and allowing the Maloofs operational control. Obviously some kind of compromise could be worked out between both of these options. I think the idea that the Maloofs would ever pay off the debt is out of the question.

FYI Rockstar is distributed by Pepsi but was co-founded by controversial radio talk show host Michael Savage and his son Russel Weiner who serves as CEO.
 
I think the story just made that point really unclear. I was trying to figure out why Caesar's would be haggling over control when they've already done the prep work to get in two months.

This comes down to whether this is a bluff for a better deal by the Maloofs or if they really have a shot for somebody else to back them and get it back on track. That depends on how much the Palms worth, and we don't know.

But the Palms 3-1 deadline is much more pressing for the Maloofs at this point.
 
It sounds like both groups own some amount of the debt due and the haggling may be over who's debt translates to the equity required to assume majority control - for that to happen it would probably require one of the two groups to sell their portion to the other; or for a third compromise plan that would be they all share equity, Palms maintains separate management but joins the existing Caesar/Harrah's Total Rewards program which would allow for cross promotion without damaging the Palms identity as a "non-corporate" casino - if that is indeed an option it probably is the best one if all three sides can actually work together.
 
http://www.sacbee.com/2011/06/15/3701395/maloofs-settle-debt-problem.html

And the drama at the Palms reaches is logical conclusion with creditors grabbing a big chunk of the Casino, but leaving the Maloofs as managers without a controlling ownership stake.

The story is correct that it relieves pressure from the Maloofs, but lets be honest here … the move isn’t “good for their finances.”

Prior to 2006, they owned X% of the Palms which worth a lot (A.)

When they took out the loan to expand, it was worth (A+) they still owned X%, they just had a loan on a big share of the value.

Because the value of the casino is now way down (D), logically they had to give up a significant chunk of the casino to pay off the debt.

No matter what the size is, the difference between X (their old share of the Palms) and Y (their new minority share) is a big kick in the teeth. Because the paid PEAK prices to build the place and then sold off a chuck at a significantly lower value, when things rebound, they cannot recoup the difference on the value they just sold. That’s big loss

http://m.vegasinc.com/news/2011/jun/14/palms-tpg-announce-partnership-significantly-reduc/
 
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