Lakes Entertainment, Inc. (NASDAQ: LACO)
announced that Penn National Gaming, Inc. (“Penn”) recently reported that the Jamul Indian Village of California (“Jamul”) and a wholly owned subsidiary of Penn announced the launch of construction activities at the site of the proposed $360 million Hollywood Casino Jamul on Jamul’s reservation in Jamul, California. Penn further reported that the Hollywood Casino Jamul, projected to open in late 2015, is expected to include a three-story gaming and entertainment facility of approximately 200,000 square feet, featuring over 1,700 slot machines, 50 live table games including poker, multiple restaurants, bars and lounges and an enclosed below grade parking structure with over 1,900 spaces
Jamul currently owes Lakes $60 million related to loans made by Lakes to Jamul in prior years under agreements for a potential casino development. Pursuant to a subordination agreement that Lakes entered into with Penn and Jamul, interest on such debt will accrue at 4.25% after the Hollywood Casino Jamul opens. Lakes agreed that it will subordinate repayment of such debt until the senior financing is paid in full, but that current interest on the subordinated debt will be paid to Lakes on a quarterly basis when the Hollywood Jamul Casino opens so long as there is no default under the senior financing agreement. When the senior financing is paid in full, Lakes will receive repayment of its outstanding principal and interest. During 2012, Lakes entered into ten-year option agreement with Penn that grants Penn the right to purchase approximately 98 acres of land which Lakes owns adjacent to Jamul’s reservation land. The purchase price for the land is $7 million which increases annually by 1%.
Tim Cope, President and Chief Financial Officer of Lakes, stated, “It is encouraging to read Penn Gaming is planning to start their initial development activities on the Jamul Tribe’s casino. We continue to be supportive of the Tribe’s effort to achieve their long-term dream. Any future recovery of amounts due to us from the Tribe will positively impact our financial position since these amounts are not currently reflected on our books.”