Florida Gaming Corp.(fka FGMGQ)

[TonyJoe1957]

The owners of Miami Jai-Alai are suing a group of lenders, alleging they conspired to take over the historic South Florida sporting venue and casino in an "unlawful" and "usurious" loan-to-own scheme.
As a result of these actions, Florida Gaming Corp. (FGMGQ:$0.70,00$0.0798,12.87%) , which owns Miami Jai-Alai, has requested that the U.S. Bankruptcy Court in Miami void the $127 million in debt held by the group.
"The Credit Agreement, when combined with the Warrant Agreement, provided ABC Funding a clear path to ultimately wrest control of the Miami Jai-Alai Casino from its owners," the company said in documents filed with the U.S. Bankruptcy Court in Miami, "and a vehicle through which ABC Funding could charge criminally usurious interest rates." ABC Funding is representing the lender group.
According to court documents, Florida Gaming Corp. (FGMGQ:$0.70,00$0.0798,12.87%) took out an $87 million loan in 2011 to expand Miami Jai-Alai after the Florida voters approved a measure to allow slot machines and other gambling.
The company said this effort was successful, and by January 2012, Miami Jai- Alai was refurbished--it included a 60,000-square-foot casino with slots, a poker room, electronic blackjack and roulette, which hosts live events including concerts and boxing and has a restaurant and three bars--and profitable.
Still, as early as June 2011, the lenders began to declare events of default-- in previously filed court documents the lenders said that Florida Gaming (FGMGQ:$0.70,00$0.0798,12.87%) failed to make principal payments--and in September 2012 ABC Funding filed a foreclosure action on the facility.
During the foreclosure action, Florida Gaming (FGMGQ:$0.70,00$0.0798,12.87%) was attempting to sell its assets. The lenders stonewalled a sale to Silvermark LLC for $114 million in cash and $15 million in assumed liabilities, which was enough to fully repay the lenders, the company said. That deal fell apart, causing Florida Gaming (FGMGQ:$0.70,00$0.0798,12.87%) to file for Chapter 11 bankruptcy in August.
Florida Gaming's (FGMGQ:$0.70,00$0.0798,12.87%) interest payments on the loan had climbed to $45,000 a day, a rate of 33%, which Florida Gaming (FGMGQ:$0.70,00$0.0798,12.87%) called "astounding and criminally usurious."
Now Florida Gaming (FGMGQ:$0.70,00$0.0798,12.87%) says the credit facility was set up illegally to ensure that Miami Jai-Alai would default, giving those lenders ownership or control over the facility, according to court documents.
A lawyer for the lenders didn't respond to request for comment Monday.
Miami Jai-Alai opened in 1926 and had for nearly a century offered live Jai- alai matches and a few poker games. Jai-alai is a blazingly fast handball-like game played on a walled court, or fronton, with a rock-hard ball, or "pelota," and a claw-like wicker basket called a "cesta." The game is said to have originated in Spain's Basque region and was brought to Florida by Cuban immigrants, where it was first played professionally in the 1920s.
The Miami venue has hosted everything from championship fights to junior women's club meetings. The Allman Brothers Band, Aerosmith and Thin Lizzy played "the High," as it was known, in the 1970s. The fronton also had a starring role in television episodes of "Miami Vice" and Anthony Bourdain's travel show.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com
--Patrick Fitzgerald contributed to this article
Write to Stephanie Gleason at [e-mail]
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