PROVIDENCE, R.I. (WPRI) — Twin River Worldwide Holdings has agreed to a settlement with Rhode Island Lottery officials in order to end a months-long behind-the-scenes dispute over the casino company’s borrowing, according to state officials.
A draft of the agreement, dated Friday and slated to be revealed Monday at a Lottery oversight hearing, calls for Twin River to make a $180,000 payment to the state as well as boost capital spending at the Lincoln casino from $15 million to $36 million over the next three years. Other provisions include hiring a full-time compliance officer and waiving one of its rights under the contract.
In exchange, the state will use a different calculation for the company’s debt.
The underlying disagreement — laid out in pages of complex legal documents and letters — involves four transactions Twin River has undertaken this year: a $700 million debt refinancing in May, a dividend to shareholders, a $250 million stock buyback program, and a $75 million share repurchase program.
The state says the refinancing put Twin River’s debt ratio over the maximum amount allowed under its 2016 regulatory agreement with the state, and also that Twin River failed to get advance permission from the state for the other three transactions.
But Twin River says the state used “an outdated and inapplicable definition” to worsen the debt calculation, and that the other transactions “were contemplated” as part of the May refinancing “and are fully compliant.”
The settlement explicitly states Twin River does not admit that its borrowing breached the 2016 regulatory agreement, which the two sides now plan to renegotiate.
“We look forward to finalizing an amended regulatory agreement with the Department of Revenue Lottery Division within the next month or so as a means to continue to work constructively together to meet the needs of the state and Twin River,” Marc Crisafulli, Twin River’s Rhode Island president, said in a statement.
“This is critical to our collective ability to remain competitive in an increasingly challenging and changing New England gaming marketplace,” he said. “To that end, we are pleased that our new agreement will involve additional capital investment at Twin River in Lincoln, which we will detail in the weeks ahead.”
Gov. Gina Raimondo — whose relationship with Twin River has soured in recent months due to the company’s outspoken fight against her proposed IGT deal — was harsher in her assessment.
“Twin River’s repeated disregard for the regulations that govern their business license raises serious red flags about the company’s leadership,” she said in a statement.
Raimondo said the limits on Twin River’s debt were put in place after the company went bankrupt in the 2000s.
“On top of the layoffs and revenue losses we’ve seen at Twin River in recent months, it’s clear that DBR and Lottery will need to continue keeping a close eye on this management team to ensure Rhode Islanders are fully protected,” she said.
Twin River spokesperson Patti Doyle said the company, which is now publicly traded, does not believe it needs to submit a filing disclosing the settlement to the U.S. Securities and Exchange Commission — a sign executives there do not view it as a major issue.
Twin River President and CEO George Papanier suggested in an Aug. 26 letter that Lottery officials’ hard line is retribution for his company’s fight to derail the proposed 20-year extension of IGT’s gaming technology contract, writing that “everything changed after we opposed the IGT deal.”
Papanier further asserted that “a senior member of the administration warned a member of my staff that there would be consequences if we opposed that deal.” He noted that state officials provided a so-called “comfort letter” back in May supporting the $700 million debt refinancing.
Administration officials reject that argument, saying the timing of Twin River’s borrowing is the reason the issue is coming to a head now, and noting the company proactively reached out to the state about the transactions.
In an Aug. 28 letter to Papainer, Lottery Director Gerald Aubin and Department of Business Regulation Director Elizabeth Tanner said it was “patently false” to suggest the state had approved of Twin River borrowing an amount that breached the debt maximum under the original calculation. They said the May letter in support of the refinancing had been premised on the debt fitting under that cap.
“To be clear, your casual disregard of the regulatory agreement that governs your license and the terms under which you are permitted to manage facilities in this state has us troubled,” they wrote.
Ted Nesi (firstname.lastname@example.org) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook