Hard Rock Biloxi Files for Bankruptcy

Now with the resort still trying to pick up the pieces and rebuild for a potential 2007 opening, the casino’s owners are declaring bankruptcy as a way to gain access to certain fund which will allow the resort to be rebuilt.

Premier Entertainment Biloxi LLC d/b/a Hard Rock Hotel & Casino Biloxi regretfully filed a voluntary petition this week in a Federal Bankruptcy Court in Gulfport, Mississippi for bankruptcy so the company will be able to tap into more than $160 million in Katrina-related insurance proceeds - enough to pay its creditors in full and rebuild the casino resort.

The action was necessary, said Premier Entertainment representatives because its Company's bondholders have refused to allow Premier Entertainment Biloxi LLC access to most of such proceeds. According to Premier, a subsidiary of Leucadia National Corporation, LUK Ranch Entertainment, acquired an interest in Premier Entertainment Biloxi LLC and subsequently made numerous tender offers to the bondholders, which would have paid 101% of the principal plus accrued interest at 10 3/4. All offers, thus far, have not been accepted by the bondholders.

"Filing for bankruptcy is an unfortunate but necessary action. The Company has sufficient resources to pay all its creditors in full and rebuild the casino, but the Company's bondholders continue to refuse to allow the Company to use its own money alleging that the Company is in default due to its failure to open the resort by December 31, 2005,” said Lawrence Hershfield, Chairman of the Board of Premier Entertainment Biloxi LLC.
"The Board of the Company has concluded that the quickest way to get access to our cash is to use a bankruptcy reorganization process."

Premier Entertainment Biloxi LLC says it intends to pay its creditors 100 cents on the dollar and will not submit or support any plan that proposes otherwise.


"This is a very unique approach, since many businesses file bankruptcy because they don't have the money to pay their bills," said the resort’s attorney Robert Byrd. "Premier Entertainment Biloxi LLC has the money they need to pay their bills, rebuild and reopen the property; they just can't get at it."

"Every legal action this company has taken since Katrina has been with a view of allowing vendors to get paid. This action is no different," said Joe Billhimer, President of Hard Rock Hotel & Casino Biloxi. "We have had made repeated requests to access insurance proceeds, only to be denied to the detriment of our vendors and creditors."

The Company does not expect the bankruptcy to cause any significant delay in its rebuilding schedule, and is planning to open in the third quarter of next year.
Premier Entertainment Biloxi LLC has spent $9.2 million protecting the property from further harm. These remediation efforts continue.

Hard Rock Hotel & Casino Biloxi is owned and operated by Premier Entertainment Biloxi LLC d/b/a Hard Rock Hotel & Casino Biloxi. The project will include 1,500 slots and 50 table games, five restaurants, including Hard Rock Cafe, a full service spa, 11-story hotel with 317 rooms and suites and Hard Rock Live, and a 1,200 capacity entertainment venue.

As of August 15, 2005 the Company had a comprehensive blanket policy providing up to $181.5 million in coverage for real and personal property, including business interruption coverage.

This insurance is comprised of a $25.0 million primary layer underwritten by Industrial Risk Insurers, a second $25.0 million layer underwritten by several insurance carriers, and a third excess layer comprised of $131.5 million underwritten by several insurance carriers. The syndicated coverage is spread between 12 different insurance carriers, each with an A.M. Best rating of a (Excellent) or better.

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