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Woes Continue for Houston Track

From Associated Press

Sam Houston Race Park’s future was in even more jeopardy after officials defaulted on a $4.3 million interest payment to bondholders.

The default came Sunday. Under the terms of the bond offering, officials at the horse racing track have a 30-day grace period to come up with the cash to meet the interest payment or negotiate a new payment schedule with bondholders.

“We did not, and had not, planned on making that payment,” said Judi Mohn, director of communications for the track. “Negotiations are ongoing, and we are not commenting on the negotiations themselves.”

Documents filed with the Securities and Exchange Commission revealed that the $4.3 million payment was the first one due on the bonds scheduled to be made from revenues generated by the track’s operations.

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Track officials have made several payments to bondholders since July 1993, but those payments were made from bond money held in reserve to service the debt during a 14-month construction period. That meant track officials were repaying bondholders with their own money.

If the track partnership remains in default after the grace period expires, bondholders have the right to begin foreclosure proceedings against the facility and other assets of the partnership.

The partnership might seek bankruptcy protection to fend off foreclosure proceedings and keep the track operating while it attempts to work out its financial problems, track officials have indicated.

Track officials met with bondholders in late November and asked them to take 50 cents on the dollar for the track’s $75 million in outstanding bonds and reduce the interest rate from 11.75 percent to 8.5 percent.

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Track officials have not commented on the negotiations with the bondholders, but general manager Jim Noteware said in December that he was confident a deal could be struck. Noteware did not return phone calls Monday, the Houston Chronicle reported.

The default marked the second time since the track opened in April that partnership officials failed to live up to their financial obligations.

Financial problems have plagued the track because the current thoroughbred meet, which began in October, has not lived up to expectations for daily attendance and per capita wagering.

Daily track attendance has plummeted from 7,500 to 3,600, and per capita wagering has fallen from $76 to $52.

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