LINCOLN – Twin River said today that it will file for Chapter 11 bankruptcy at the end of June if it cannot restructure its debt in agreements with its lenders and the state by the close of the legislative session.

“We deeply regret that, despite lengthy and extraordinary negotiations to achieve a deal that benefits all interested parties, it has not yet been possible to reach an agreement that will avert a bankruptcy,” said Twin River spokeswoman Patti Doyle in a statement.

Doyle said the Lincoln-based video slot parlor has been in discussions with its lenders and the state for more than a year. “On several occasions, we believed that we were close to a consensus on a number of viable solutions, only to see each of those proposals fall through,” she added.

If today’s statement was intended to spur action on the part of Gov. Donald L. Carcieri, it initially didn’t appear particularly effective.

“The state continues to talk with all parties in an effort to find a consensual agreement which we believe is a better option than bankruptcy,” said Gary Sasse, director of the departments of administration and revenue. “However, throughout our discussions with Twin River and their lenders, we have always been clear that the state would not support a bailout at the expense of Rhode Island taxpayers.”

Twin River’s money woes have been well-documented.

It is on the brink of bankruptcy because it is unable to pay back $565 million in loans after paying $445 million for the antiquated slot venue and greyhound race track in 2005 and then investing $225 million in renovations. (READ MORE)

Twin River parent company UTGR Inc. – a subsidiary of BLB Investors LLC – has missed loan payments, has had its bond rating downgraded and has liens totaling $6 million placed against it by contractors that had performed the extensive renovations.

The main lender, Merrill Lynch Capital Corp., has held off taking action at UTGR, even though a forbearance agreement expired months ago.

The future of Twin River is of great importance to state leaders, who want to protect the hundreds of million of dollars the video slots generate in revenue for the state each fiscal year.

Last year, BLB Investors LLC offered to make a one-time payment of $560 million in exchange for drastically reducing the percentage the state would get from future video-slot earnings.

But state leaders refused, saying the state would continue to get its share, even if Twin River filed for bankruptcy.

There had also been suggestions that the state might take over the gambling facility as a way of protecting the revenue, but that never materialized.

Sasse’s statement today did indicate that state officials are somewhat concerned that the stigma of bankruptcy could hurt attendance at the slot parlor.

“I want to reassure the patrons of Twin River that they have no reason to be concerned about payout percentages or payment of winnings at Twin River,” Sasse said. “The Rhode Island Lottery sets the payout percentages on all the slot machines, which offer some of the highest payouts in New England, and collects all cash at Twin River to ensure that payouts are made on a timely basis. The Rhode Island Lottery will continue to oversee this important function."

Doyle said Twin River’s owners want to step up discussions with its lenders before the end of the General Assembly session.

“We nonetheless remain hopeful that in the few weeks left before the current legislative session ends, all parties involved in the negotiations will redouble their efforts to reach an agreement that avoids a bankruptcy, which is the worst outcome for everyone,” she said. “To that end, Twin River’s owners, management, and advisors are committed to intensifying talks with all constituents to hopefully forge a fair and workable compromise in the short time remaining. But absent an agreement, Twin River will have little choice but to file for bankruptcy on or soon after June 26, 2009.”