To be viewed as a white elephant, a project must at least be completed before it fails. It is still possible that Don Barden’s Majestic Star Casino may not even make it that far.

Construction on the North Side slots parlor stopped June 30 after Barden failed to pay more than $10 million he owed contractors for work done in April and May. The stoppage could last from two days to two weeks.

DON BARDEN

He had been unable to complete the $780 million financing package he told state gaming officials he’d have in place for the project by last month. Dan Keating III, chairman of prime contractor Keating Building Corp., requested the stoppage until permanent financing is in place.

At a late afternoon press conference, Barden spokesman Bob Oltmanns said Chicago billionaire Neil Bluhm, who heads the Walton Street Capital Fund 6 investment firm, had agreed to a $120 million equity investment in the casino.

“The contractors left fully supportive, very supportive of the project, and very anxious to get back to work,” Oltmanns said. “We’ll be in the position to pay once we have completed the permanent financing.”

Though Oltmanns said the agreement should be finalized by mid-July, it still has to pass muster with the state gaming control board because Bluhm, like Keating, is also an investor in Philadelphia’s Sugarhouse casino project. The board’s next meeting is scheduled for July 10.

Barden is also continuing to close a $600 million financing agreement with Credit Suisse. In may, Barden was forced to sell his Fitzgerald’s casino in Las Vegas when Wall Street credit agencies downgraded his company’s rating. He reinvested his $35 million share of the sale into Majestic Star.

Bluhm’s commitment replaces a $150 million loan from Apollo Global Management that was never finalized. Until the new deal is finalized—and Barden pays the overdue $10 million—only a small number of Keating employees will remain on site.

Neither Bluhm nor Keating could be reached for comment.

Allegheny County Chief Executive Dan Onorato said if the stoppage drags on longer than two weeks, then “we have a problem.”

“I spoke to Don Barden today, and he informed me that he has secured adequate financing to complete construction of the Majestic Star Casino by May 2009,” he said later in a prepared statement. “Mr. Barden further stated that work may be slowed or suspended for a few days while the financing is finalized, but it will not affect the overall construction schedule. My goal has always been to see a quality casino opened in Allegheny County by May 2009, and Mr. Barden has told me that will happen.”

State Sen. Jim Ferlo, D-Lawrenceville, who had raised previous alarms about Majestic Star’s financing, is also apprehensive about the loss of potential state revenue and proposed tax relief tied to the casino project. He noted the Bluhm deal to replace the failed Apollo loan appears to still leave Barden $30 million short.

Gaming control board spokesman said the major concern is making sure Bluhm’s contribution does not violate state law due to his stake in the Philadelphia casino.

“We need to look at the entire deal to make sure it complies to the letter of the law,” he said. “It’s a short time line. We won’t sacrifice quality for speed, but the board understands, too, that the financing package needs to be looked at as soon as possible.”

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