The companies are expected to close in the first quarter of 2005, and the deal requires approval from state and federal regulators. The deal includes working funds at the close of the sale, giving Barrick the right to use the name Golden Nugget for up to two years.
Stephen Crystal, the co-founder and president of Barrick Gaming, said his company plans to retain Golden Nugget Laughlin's current employees and will not fire them. The 300-room hotel-casino has about 1,000 employees.
Golden Nugget Laflin is Barrick's third-largest Southern Nevada acquisition of the year. The company acquired Jackie Cohen's four major downtown hotel casinos (Plaza and seven acres, Las Vegas Club, Western Hotel, and Gold Spike) for $82 million in March. Last month, the company acquired Queen of Hearts and Nevada hotel casinos for $7.1 million.
During a conference call Wednesday to announce Foster Financial Group's third-quarter earnings results, Foster Financial Chairman and Chief Executive Officer Tim Foster said finance drove the company's decision to sell Golden Nugget Loplin.
"During the quarter, we received several unwanted attractive offers to buy the Loughlin property," Foster said. "Cautious analysis revealed the difference in the return on capital reinvestment on our two hotel-casino properties. It is clear that the return on the Las Vegas property was and will continue to be higher."
Meanwhile, Foster said his company will use the proceeds from Golden Nugget Laflin to repay it 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 Laughlin and downtown Las Vegas purchases. He said both markets are attracting value-seeking customers, both are poised to integrate, and both have untapped potential.
"Both are being criticized for not being growth markets, but in fact both are showing that they are in recent growth mode," Crystal said. "The time has passed for Rahlin to grow as a community and as a place for people to retire."
Crystal said it expects to rebrand the property before the two-year title period ends.
"We hope we don't rely on the name (Golden Nuggets) for a long time," he said. "We hope to rebrand as soon as it becomes practical."
Meanwhile, Foster Financial reported a sharp drop in net loss and cash flow during the third quarter ended Sept. 30, hit by a low table game holding ratio.
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In a statement, the company said it officially posted a net loss of $8.7 million for the quarter ended Sept. 30, compared to $900,000 a year earlier. The amount reflects the acquisition of Golden Nugget Las Vegas and Golden Nugget Laflin casinos and related financial transactions that occurred in early 2003.
Poster Financial completed the acquisition of the property for $213.7 million, consisting of a $215 million purchase price (full-time working capital and other adjustment costs adjusted to $210.2 million) 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, to $300,000, compared with $6.7 million a year earlier.
Consolidated revenue rose 6.8% to $60.9 million from $57 million.
Despite the results, Foster remained upbeat. In a conference call, he said other key business indicators, including share and daily average rates, rose in the quarter. Slot handles and table game declines also rose, he said.