http://mesquitelocalnews.com/viewnews.php?newsid=1402&id=2Hopes that either Station or the Pepermill comes back....(you should see the reviews of the hotel rooms at the oasis online...)
Black Gaming Authorized To Close One Casino
By Morris Workman 11-17-2008
The Oasis Casino is one of three
casinos owned by Black Gaming that may
be under the microscope in the coming
months. While company owner Randy
Black has stated that none of the
casinos are set to close right now,
lenders have given the company
permission to investigate the
possibility of closing one of the
properties due to staggering losses.
Properties Facing More Layoffs
With the gaming industry continuing its downward spiral in an increasingly difficult economy, Black Gaming has reported that it has received permission from its creditors to close one of the company’s three casinos.
While this shocking revelation was discussed in last Wednesday’s conference call between owner Randy Black and the company’s bondholders, and was mentioned in the company’s most recent Securities and Exchange Commission filing, the authorization does not necessarily mean that the CasaBlanca, Oasis, or Virgin River are in immediate danger of closing.
Instead, it simply allows the company an additional option while trying to figure out how to stay in business.
Unfortunately, one of the other options is currently being implemented:
Layoffs.
While Black would not speculate on Friday about the number of layoffs that took place last week, or how many more people would be losing their jobs in the coming weeks, he confirmed that more reductions are on the way.
“We’re still working through the details,” Black said.
“We’re doing everything we have to do, and I’m going to do whatever I have to do, to stay in business.”
During Wednesday’s conference call, Black characterized the current economy as “unprecedented.”
“Revenue declines have accelerated,” he told the bondholders.
The numbers in the most recent SEC filing confirm that the company continues to hemorrhage money.
In the third quarter of 2008, ending Sept. 30, the company lost $10.1 million dollars, bringing the total losses to $34.4 million for the year.
The loss of revenue leaves the company upside down in assets vs. liabilities.
The company shows total assets of $166.3 million, but liabilities of more than $221.4 million, a shortfall of $55 million.
In other words, the company is only worth about three-quarters of what it owes.
The biggest part of that liability is more than $203 million worth of bonds and other long term debts.
The largest of those, a $125 million note, is due Jan. 15, 2012.
It is that debt service, meaning bond and loan interest payments, which continue to put a strain on the company’s finances.
In fact, that shortfall has triggered a default with the smallest of the loans, a $15 million note with Wells Fargo Foothill.
Originally, that note was scheduled to be repaid in September of this year, but Black and his company were able to renegotiate the payoff date to June 30, 2011.
The default has led to the discussion of temporarily closing one of the three casinos.
“Are we going to close one? Right now, no,” Black said on Friday, echoing his statement from Wednesday that “we’re not looking at closing any casino at this time.”
However, Black wouldn’t rule out the possibility at a future date, particularly because the company is running out of options.
One option mentioned was the possibility of refinancing or recapitalizing the company.
But with the recent collapse of the lending industry, and the continuing decline in the stock market, gaming experts have indicated that sources for new money have all but dried up.
Another option would be for Black to sell one or all of the casinos, which has led to ongoing rumors that the company has been or about to be sold.
The name of the Las Vegas casino rumored to be buying out Black seems to change almost weekly.
Black himself continues to insist that his properties aren’t for sale, and that no sale is imminent.
That position is substantiated by the fact that many of the biggest gaming properties in Las Vegas are suffering similar difficulties.
Las Vegas Sands, which owns the Venetian and Palazzo casinos in Vegas, was recently forced to issue 200 million shares of stock in order to cover its own debt problems after announcing that if it didn’t find the new financing, it might “raise a substantial doubt about our ability to continue as a going concern,” meaning they might not be able to stay in business.
The Tropicana, one of the most venerable of the casinos on the strip, is currently in Chapter 11 bankruptcy.
Tropicana’s failure is the cautionary tale for using layoffs as a survival method.
The company was forced into bankruptcy after the state of New Jersey pulled their gaming license for their Atlantic City casino.
According to an Associated Press report, the license was pulled after a series of cost-cutting layoffs led to service, maintenance, and cleanliness problems at the Atlantic City property.
The company is currently trying to sell that casino.
In Mesquite, the problem continues to be a reflection of the overall anemia in the national economy.
Black explained that the I-15 traffic count is down 11%.
Also, while the company has had some success in bringing more people into its hotels and casinos, that influx has not translated into more dollars.
According to Black Gaming’s Chief Accounting Officer, Sean McKay, “Increased customer counts have not increased customer spends.”
“We’ve got people coming,” Black agreed. “Hotel occupancy is about the same as last year.”
The problem is that people are gambling less and spending less while in the casinos.
And things aren’t getting any better.
“It’s getting worse every minute,” Black said on Friday, citing as an example the fact that eight companies have cancelled their holiday parties at his properties for the months of November and December.
However, Black recognizes that most of the problems are short term.
“I’m still optimistic about the long term prospects in Mesquite,” Black told bondholders on Wednesday.
He also ended the conference call with an unexpected suggestion to the collection of money guys and number crunchers:
“Pray for a better economy.”
Author
