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LAS
VEGAS, Nevada - The company that bought four downtown
casinos last year and devised plans to redevelop the neighborhood
with new commercial districts and high-rise condos is
in financial trouble, according to several sources familiar
with the company.
Barrick
Gaming Corp. bought the Plaza,
the Las
Vegas Club, the Western
and the Gold
Spike from downtown casino operator Jackie Gaughan
in March 2004.
Regulators
have scheduled a public hearing this Wednesday to consider
an application by Barrick's landlord and silent partner
to "participate in operations." The Gaming Control
Board and Nevada Gaming Commission will vote on the application
in back-to-back meetings.
The
landlord, Tamares Barrick Las Vegas Properties, is jointly
owned by Barrick and a company called Tamares Las Vegas
Properties, which is affiliated with a private investment
company called Tamares Group.
Tamares
has approached regulators because it wants to be able
to loan money to Barrick to keep the casinos operating
while Tamares decides whether to install a new management
company, sources said.
Tamares put up much of the money for Barrick Gaming to
buy the casinos, according to sources familiar with both
companies.
Sources
say Barrick has been struggling to make debt payments
because the interest rate is too high relative to what
the properties have been generating.
"Barrick
has mired themselves with debt," one source said.
"They are way overlevered."
Tamares has the right to remove Barrick if Barrick defaults
on its loan to Tamares, according to another source.
"They
were just barely able to buy the properties much less
make capital improvements," the source said. "They
have been falling further behind."
Barrick
officials could not be reached by press time.
Barrick
executives have repeatedly said that the properties are
making a profit and performing better than they were under
the previous owners. They have also denied rumors of financial
problems.
But
sources say interest owed to Tamares has been eating away
at that performance and that Gaughan, unlike Barrick,
owned the properties free and clear.
Barrick
operates the casinos under a tenant relationship with
Tamares, a framework created so that Tamares wouldn't
have to get a Nevada gaming license.
Tamares
Group was founded by Finnish entrepreneur Schlomo Zabludowicz
and is now headed by his son Poju. The company's Web site
cites "significant worldwide interests in finance,
real estate, technology, manufacturing and leisure."
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