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Off-Track Betting, seen here at its Franklin Square location, and the Nassau Regional corporation failed to make pricipal and interest payments on cash-flow bonds in March 2016. Photo Credit: Gabby Recny
Nassau Regional Off-Track Betting Corp. has missed a $3 million payment on a short-term note to a Manhattan investment bank as it awaits revenue from a deal transferring its authority to install 1,000 video slot machines to Aqueduct Racetrack in Queens.
A securities filing issued this week by Nassau OTB said the agency failed to make principal and interest payments on cash-flow borrowing that were due March 22.
The “Principal/Interest Payment Delinquency” filing said OTB is “in the process of negotiating a forbearance agreement with the note holder,” Roosevelt & Cross, a Manhattan investment bank. Forbearance is a temporary postponement of payment.
“We are currently negotiating with our note holder to arrive at an agreement that will satisfy our obligation,” OTB said in a statement. “We are confident that we will reach an agreement in this regard.”
In December 2014, OTB borrowed $5 million by selling revenue anticipation notes. In December 2015, it paid off $2 million and refinanced, for three months, the remaining $3 million with a five percent interest rate — considered high for short-term borrowing.
Herman Charbonneau, Roosevelt and Cross’ executive vice president, said it expects OTB to pay down the short-term notes next month when it receives an initial $5 million payment from Genting New York LLC, which operates Resorts World casino at Aqueduct. Roosevelt & Cross will not charge OTB a penalty or demand higher interest payments for missing the deadline, Charbonneau said.
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“Roosevelt & Cross has a vested interest in seeing this issue resolved,” said Charbonneau. “We will continue to work with Nassau OTB to work out these issues.”
An OTB spokesman said it was too soon to say whether the agency will pay off the short-term borrowing in full next month.
Genting, a Malaysia-based firm, struck a deal last month to acquire Nassau OTB’s authority to install 1,000 video lottery terminals. OTB had planned to build a VLT casino at state-run Belmont Park but faced intense community opposition.
The agreement, which was included in the state budget, calls for Genting to make an initial $5 million payment to OTB in May and another $4 million payment by year’s end.
Next April, Genting would begin making monthly $750,000 payments to OTB, totaling $9 million for 2017. In April 2018 — or sooner if Genting has the additional 1,000 VLTs in place — the company would send OTB monthly payments of just over $2 million, or $25 million for the year, OTB president Joseph Cairo said last week.
Future payments to OTB would be $25 million per year, plus an amount adjusted for inflation, and would continue as long as the Aqueduct VLTs are operating, Cairo said.
The State Gaming Commission must approve the Genting-OTB deal.
OTB would use an as-yet-undetermined percentage of the Genting revenue to pay down $12 million in agency debt, including its operating deficit, Cairo said. OTB ended 2015 with an operating deficit of more than $7 million, according to county officials.
Cairo said the remaining Genting money would go to Nassau, allowing the county to receive a steady source of revenue. OTB officials declined to say how the delayed $3 million payment would affect its ability to deliver that revenue to the county.
With Ted Phillips
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