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CASINO CONTROL COMMISSION CONSIDERS NEW STANDARDS, TO HOLD PUBLIC HEARINGS FEB. 3

 CASINO CONTROL COMMISSION CONSIDERS NEW STANDARDS,
 TO HOLD PUBLIC HEARINGS FEB. 3
 ATLANTIC CITY, N.J., Jan. 9 /PRNewswire/ -- The financial stability of casino licensees would be linked in part to their ability to fund needed capital improvements and contribute to the overall redevelopment of Atlantic City, under new standards being considered by the Casino Control Commission.
 "Casino gambling was legalized as a mechanism to rebuild Atlantic City. That is the paramount goal of the Casino Control Act, but it won't be accomplished by companies with highly leveraged balance sheets that can't afford to make investments in Atlantic City's future," Commission Chairman Steven Perskie said.
 "The ability to fund capital improvements won't be the only criterion the commission will use to determine when a licensee meets our standards of financial stability, but it remains an important one."
 The new criteria will be discussed at a public meeting to be held Feb. 3 at 10 a.m. in the Joseph P. Lordi Public Meeting Room in the commission's headquarters at Tennessee Avenue and the Boardwalk in Atlantic City. The commission invites the public, including representatives of the casino industry and the financial community, to attend this meeting and offer input. The commission is then expected, by the spring, to adopt a version of these criteria as part of its regulations.
 By adopting this set of standards, the commission intends to remove some of the uncertainty from the regulatory process, Perskie said. Casino officials, regulators and the financial community will know in advance what standards casino applicants and licenses will be required to meet. Until now, the commission dealt with the issue of financial stability on an ad hoc basis, judging each casino applicant and licensee on its own financial situation without any generally applicable criteria.
 The consulting firms of Christiansen/Cummings Associates Inc. and Charterhouse Inc. were awarded a $164,000 contract by the commission last year to come up with a definition of financial stability that could be applied uniformly to all casino applicants and licensees.
 The consultants' report, which outlines the proposed set of criteria, also recognizes why financial stability and financial condition are a high priority for the agencies that regulate Atlantic City casinos: "The Casino Control Commission and the Division of Gaming Enforcement are New Jersey's first -- and only real -- line of defense against financial problems that are capable of destroying Atlantic City's gaming industry as surely as the infiltration by organized crime these agencies effectively prevented," the report reads.
 All 12 casinos operating in Atlantic City are financially stable under the proposed definition, according to Christiansen/Charterhouse. However, there may be wide variations in terms of their financial conditions.
 "The commission has the right -- and, we believe, the obligation -- to look beyond financial stability into the overall areas of financial condition," Perskie said. "Licensees, while stable, could still find themselves facing serious -- and unacceptable -- financial problems. Those licensees will be closely monitored. The commission has imposed -- and will continue to impose -- strict reporting and other requirements on those licensees."
 These criteria will help licensees and regulators know when a casino's financial condition is deteriorating and will help identify what licensees need to do to meet the commission's definition of financial stability.
 Under the definition of financial stability, all casino licensees would be required to meet four "core" tests:
 1. Casinos must have sufficient cash or reserves to pay off any winners.
 2. Casinos must have sufficient financing to fund all daily operations, including meeting their payrolls, paying their taxes and meeting their pension obligations.
 3. All licensees must have the continuing ability to maintain and upgrade their properties in a timely fashion.
 4. Casinos must have sufficient resources to meet the requirements of the Casino Reinvestment Act. This law requires that casinos invest the equivalent of 1.25 percent of gross gaming revenues in Casino Reinvestment Development Authority bonds or in projects approved by the CRDA.
 Licensees that fail to meet any of these tests face a possible loss of licensure. Licensees that meet these "core" tests would then be required to meet four supplemental criteria:
 1. The commission must be assured that all licensees have the ability to meet their long-term debt obligations, such as balloon loan repayments that come due beyond license periods.
 2. Licensees must demonstrate that any new debts will not impair the company's financial stability. This includes any debts incurred by the licensee or an affiliated company, such as a parent corporation or subsidiary.
 3. The commission will require that Atlantic City casinos be sufficiently insulated from any claims against the licensee or its related companies arising from the operations of non-Atlantic City casinos or other affiliates.
 For example, if a company that operates an Atlantic City casino hotel invests in a seemingly unrelated field, the commission would need to be assured that the Atlantic City property won't be adversely affected if that investment proves to be unsuccessful.
 4. The commission will only permit the "upstreaming" of cash to parent or holding companies or the "downstreaming" of liabilities if they do not impair, in the commission's judgement, the financial condition of licensees or endanger financial stability.
 Licensees that fail to meet any supplemental criteria would be required to report on a monthly basis to the commission and will file, among other things, performance reports and projections as to when all supplemental requirements would be met. The commission might also require that they obtain prior approval from regulators before making certain financial transactions.
 The commission, recognizing the complex nature of casino financing, would retain its full powers of administrative discretion under these new standards.
 Perskie promised that the commission would remain flexible and responsive in the face of changing financial situations.
 The proposed standards for financial stability, however, will remove any guesswork from the regulatory process, he said. Licensees will know when they are meeting the state's standards. The consultants have recommended that all licensees that meet the core tests be required to submit quarterly financial and operating reports that, among other things, will project future performance for one year and for the remainder of the licensing period.
 The proposed definition of financial stability represents the first phase of the Christiansen/Charterhouse engagement. In the next phase, the consultants will develop these financial stability requirements into a computer model that will make it easier to collect and analyze the necessary financial data. Christiansen/Cummings of New York and Boston has extensive experience as a gaming consultant and has substantial background in debt restructuring. Charterhouse Inc. is a wholly owned subsidiary of The Royal Bank of Scotland and has expertise in the area of investment banking.
 /delval/
 -0- 1/9/92
 /CONTACT: Michael Pollock of the Casino Control Commission, 609-441-3799/ CO: Casino Control Commission ST: New Jersey IN: CNO SU:


CC -- PH009 -- 8206 01/09/92 12:00 EST
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Date:Jan 9, 1992
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