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 LAUGHLIN,
Nevada - Barrick Gaming Corp. expanded its Southern
Nevada portfolio on Wednesday, acquiring the Golden
Nugget Laughlin for $31 million from Poster Financial
Group.
The
deal, which the companies expect to close in the first
quarter of 2005, requires state and federal regulators'
approval. The deal includes working capital at the sale's
closure, and grants Barrick rights to use the Golden Nugget
name for up to two years.
Barrick
Gaming co-founder and President Stephen Crystal said his
company plans to keep the Golden
Nugget Laughlin's current staff and plans no layoffs.
The 300 room hotel-casino has about 1,000 workers.
The
Golden
Nugget Laughlin is Barrick's third big Southern Nevada
acquisition this year. The company in March acquired Jackie
Gaughan's four principal downtown hotel-casinos -- the
Plaza
and its seven additional acres, the Las
Vegas Club, the Western
Hotel and the Gold
Spike -- for $82 million. Last month, the company
bought the Queen
of Hearts and Nevada hotel-casinos for $7.1 million.
In
a conference call Wednesday announcing Poster Financial
Group's third-quarter earnings, Poster Financial Chairman
and Chief Executive Officer Tim Poster said finances drove
this company's decision to sell the Golden
Nugget Laughlin.
"During
the quarter, we received several unsolicited and attractive
offers to purchase the Laughlin property," Poster
said. "Careful analysis has brought to light the
different rates of return on capital reinvestment in our
two hotel-casino properties. It is evident that the rate
of return has, and will continue to be, greater at the
Las Vegas property."
Meanwhile,
Poster said his company would use proceeds from the Golden
Nugget Laughlin to repay and reduce debt. In a statement,
Poster Financial said it expects a modest gain from the
sale, but gave no specifics.
Barrick's
Crystal said his company sees similarities between its
Laughlin and downtown Las Vegas purchases. Both markets
attract value-seeking customers, both are ripe for consolidation,
and both have untapped potential, he said.
"While
both markets have been criticized for not being growth
markets, in fact both markets are showing recently that
they are in a growth mode," Crystal said. "Laughlin
is over time going to grow as a community and as a place
where people will retire to."
Crystal
said he expects to rebrand the property before the two-year
name-rights period ends.
"We
hope not to rely on the (Golden
Nugget) name for long," he said. "We hope
to rebrand as soon as is practical."
Meanwhile,
Poster Financial reported a pro forma net loss and a sharp
drop in cash flow during the third quarter ended Sept.
30, hurt by low table-game hold percentage.
In
a statement, the company said it had, on a pro forma basis,
a net loss of $8.7 million the quarter ended Sept. 30,
compared with a net loss $900,000 a year earlier. These
amounts reflect the acquisition of the Golden
Nugget Las Vegas and Golden
Nugget Laughlin casinos and related financing transactions
as if they had occurred at the beginning of 2003.
On
Jan. 23, Poster Financial completed the acquisition of
the properties for $213.7 million, consisting of a $215
million purchase price (adjusted to $210.2 million for
working capital and other adjustments at the closing date)
and approximately $3.5 million in transaction fees.
Also
for the third quarter, Poster Financial said it had pro
forma negative cash flow, defined as earnings before interest,
taxes, depreciation and amortization, of $300,000, compared
with positive cash flow of $6.7 million a year earlier.
Pro
forma consolidated revenue rose 6.8 percent to $60.9 million
from $57 million.
Despite
the results, Poster remained upbeat. During the conference
call, he said other key business indicators were up in
the quarter, including occupancy percentage and average
daily rate. Slot handle and table-game drop also increased,
he said.
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