Casino operator expansion to close third Las Vegas-area real estate deal this year

Barrick Gaming on Wednesday expanded its portfolio in Southern Nevada, acquiring Golden Nugget Loughlin from Foster Financial Group for $31 million.

The deal, which the two companies are expected to enter into in the first quarter of 2005, requires approval from state and federal regulators. The deal includes working capital at the end of the sale and grants Barrick the right to use the name Golden Nugget for up to two years.

Stephen Crystal, co-founder and president of Barrick Gaming, said his company plans to retain Golden Nugget Laughlin's current staff and not fire him. The 300-room hotel casino has about 1,000 employees.

Golden Nugget Loughlin is Barrick's third large Southern Nevada acquisition this year. In March, the company acquired four major downtown hotel casinos, Plaza, and seven acres of Las Vegas Club, Western Hotel, and Gold Spike, for $82 million. Last month, the company acquired Queen of Hearts and Nevada hotel casinos for $7.1 million.

On a conference call Wednesday, when Foster Financial Group reported third-quarter earnings, Foster Financial Chairman and CEO Tim Foster said the finance had decided to sell Golden Nugget Loughlin.

"During the quarter, we received several unwanted and attractive offers to buy Loughlin properties," Foster said. "Careful analyses revealed the difference in return on capital reinvestment in the two hotel casino properties. The return on Las Vegas properties was higher and will certainly continue to be so."

Meanwhile, Foster said the company would use the proceeds from Golden Nugget Loughlin to repay and reduce its debt. In a statement, Foster Financial said it expected some profit from the sale, but gave no details.

Barrick's Crystal said his company sees similarities between Loughlin and its downtown Las Vegas purchases. He said both markets are attracting value-seeking customers, both are ripe for consolidation, and both have untapped potential.

"Both markets have been criticized for not being growth markets, but in fact, both markets are showing that they are in a recent mode of growth," Crystal said. "Loughlin will grow over time into a place where communities and people will retire."

Crystal said she expects to rebrand the property before the end of the two-year copyright period.

"We hope we don't rely on the (Golden Nugget) name for a long time," he said. "We hope to rebrand as soon as it becomes practical."

Meanwhile, Foster Financial reported a sharp decline in net loss and cash flow for the third quarter ended Sept. 30, hit by a low table game holding ratio.

In a statement, the company said it posted a net loss of $8.7 million for the quarter ended Sept. 30, compared to a net loss of $900,000 a year earlier. These amounts reflect acquisitions and related financial transactions at Golden Nugget Las Vegas and Golden Nugget Laflin casinos, as if they had occurred in early 2003.

On Jan. 23, Foster Financial completed its acquisition of the property, which comprises a $213.7 million purchase price (adjusted to $215.2 million for working capital and other adjustments at the closing date) and a transaction fee of approximately $3.5 million.

In addition, Foster Financial said it formed negative cash flows in the third quarter, defined as earnings before interest, taxes, depreciation and amortization, compared to positive cash flows of $6.7 million in the year-ago period.

Proforma consolidated revenue rose 6.8% to $60.9 million from $57 million.

Despite the results, Foster remained optimistic. On a conference call, he said other key business indicators, including share and average daily percentage, rose in the quarter. Slot handles and table game declines also increased, he said.  바카라사이트 추천