Tuesday, March 09, 2010

The Big B Post

If casinos are so valuable, why did nobody swoop in to bail out the owners of license for a new casino in Lawrence County declared bankruptcy yesterday.   Yes, it was the parent and it's all more complicated than that, but still.  That and Carl Ichan looks like he has bought the Tropicana Casino in Atlantic City out of bankruptcy at 20 cents on the dollar or something like that. 

In an article in LancasterOnline today is this quote from the Lancaster Mayor saying: ""I think sooner or later, you're going to see a municipality really go into bankruptcy in Pennsylvania,".

Well,  there is a problem with that statement. The 'sooner or later' part.  Sure looks to me that a Pennsylvania municipality has gone through bankruptcy recently.  Read this press release from Pepper Hamilton on their work taking Westfall Township in Pike County Pennsylvania through Chapter 9 bankrtupcty.   If I understand their math, they are touting their settlement of the municipality's debt at 30 cents on the dollar.  I'd apply that ratio to the city's debt here, but people might get carried away.  It would be a number far bigger than any potential net gain from sale/lease of the parking assets. 


Blogger fester said...

Chris, doing the NPV calc (20 years of no interest to pay off 6 million bucks) the haircut is probably 80% to 85% of the previously owed NPV.

Pittsburgh should really think about going this route as I am pretty sure that the next couple of budgets don't anticipate any major bond issues so the threat of credit market sanctions is fairly low. The cost is higher interest, the benefit is the Pittsburgh structural deficit problem is resolved.

Wednesday, March 10, 2010 10:05:00 AM  
Anonymous MH said...

I'm guessing Pittsburgh leaders think about going that route all the time. Then their spouses wake them up and they remember that Harrisburg can stop them.

Wednesday, March 10, 2010 11:12:00 AM  
Blogger C. Briem said...

Probably can't consider right now as long as there is a cash balance.

and I have a suspicion there will be a bond of some kind out there. If nothing else, they need to get the pension 50% funded by end of the year yet it's hard to see how they complete the deal by then. Some form of parking asset revenue anticipation bond?? and if the sale price of the parking assets isnt high enough they might need some additional cash just to get them over 50% per the actuarial report they have and will be forced to report soon.

Wednesday, March 10, 2010 6:23:00 PM  

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