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One of the companies hoping to bring a resort centered around a casino to Richmond is behind on federal paperwork. An executive traced the delays to the sale of its stake in a Maryland casino during a Friday earnings call.
Urban One — half of RVA Entertainment Holdings, LLC — said in a May 10 filing that it would file its quarterly report by July 15. The form was due May 15. Urban One also missed the deadline for its 2022 annual earnings report.
The forms offer details into a company’s business, including financial results and risks, according to the U.S. Securities and Exchange Commission. The notifications that they would be filed late came as Mayor Levar Stoney’s administration started pushing for a November referendum on the casino and city council was considering legislation on adding it to the ballot.
A city spokesperson didn’t answer questions on whether the city was aware of the delayed filings and how they were perceived by officials.
Urban One announced on April 7 that the Nasdaq Stock Market sent the company a letter saying it was out of compliance with listing requirements, meaning it could be removed from the exchange, if it didn’t file an annual earnings report by June 2. Urban One filed the report June 30.
Da Lin, an associate professor at the University of Richmond School of Law, said that delisting from a stock exchange means the public is unable to access stock, making the investment less attractive to investors.
The company said the delay was caused by accounting issues surrounding the sale of its investment in a Maryland casino. It sold its minority interest in the MGM National Harbor, across the Potomac River from Alexandria, for $136.8 million in April. The company had purchased its interest for $40 million in 2016 and sold the stake back to MGM National Harbor.
Urban One CFO Peter Thompson told VPM News in an email that it was an “extremely profitable investment.”
In filings notifying the SEC of the delay, Urban One said that “material weaknesses exists in the Company’s internal control of financial reporting for the Affected Periods.” Thompson expanded on that in the earnings call with investors late last week, saying the company should’ve reclassified the investment as a debt security available for sale.
Previous financial disclosures understated the value of the interest in MGM casino, according to the May 10 filing.
During Friday’s call, Thompson told investors the delay was because Urban One had to bring in outside accounting firms to assess quarterly value from 2020 and 2021.
Thompson also said the company would know more this week about when it would file the quarterly form. Nasdaq gave the company an extension through Sept. 27.
Investor questions, which came mostly from representatives of investment companies, were focused on the company’s foray into the casino market. CEO Alfred Liggins said the chances of a referendum result allowing the company to operate a resort casino in Richmond were a “50-50 shot.”
“We’ve got to articulate the other aspects of the resort not just the casino part, the entertainment vehicle. We got to do a better job of getting out our voters,” Liggins said. “I’ve always said that people should look at our company as you know, as a baseline, and decide whether or not they’re comfortable with our existing operations and our balance sheet and look at the casino as upside.”
Richmond voters will decide whether bringing the resort centered around a casino is worth the risks of increased gambling addiction and traffic incidents in a referendum this fall. City officials attempted to bring a second referendum last year, shortly after residents narrowly defeated the 2021 proposal. The referendum results, which mirrored racial lines in the city, have played a role in how the casino is discussed.
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