Pinnacle buys Aztar;
two-year Trop
design expected

Mar 14, 2006 4:27 AM

For those who have been speculating what would become of the Tropicana Hotel/

Casino on the Las Vegas Strip, Dan Lee came up with the answer: Pinnacle Entertainment Inc. (PNK).

On Monday, Pinnacle announced that it would acquire all outstanding Aztar Corp. (AZR) stock for $38 per share in cash. The company also would assume the Tropicana debt amounting to about $720 million, valuing the total acquisition at about $1.45 billion.

And for those who thought the implosion of the Tropicana Las Vegas was just around the corner, Lee suggested to not hold your breath. Pinnacle has a lot of development on its plate even before the Tropicana deal.

When the merger is consummated, expected to be sometime before the end of the calendar year, the combined companies will have a dozen gaming properties in the U.S. Operations will be in Nevada, New Jersey, Louisiana, Missouri and Indiana.

Properties being acquired, in addition to the Tropicana Las Vegas, are Tropicana Atlantic City, Ramada Express in Laughlin, Nev., Casino Aztar in Caruthersville, Mo., and Casino Aztar in Evansville, Ind.

"Combining Pinnacle and Aztar makes tremendous sense," said Dan Lee, chairman and CEO of Pinnacle Entertainment. He took over the company after former chairman and CEO R.D.Hubbard got in trouble with Indiana gaming authorities over allegations of importing party girls. Prior to that, Lee served several years as chief financial officer for Steve Wynn’s Mirage Resorts.

"This transaction will enable Pinnacle to further broaden and diversify its geographic presence and cash flows, as well as generate cross-marketing synergies. We intend to create a nationwide casino network, not unlike that of some of our larger competitors," Lee said.

Pinnacle opened its most spectacular property in Lake Charles, La., in May, 2005, that escaped major hurricane damage. Not so was a casino in Biloxi, Miss. that was completely destroyed and another, Boomtown in New Orleans that was heavily damaged.

Just a few months ago, the company was approved for a pair of casino projects in Missouri, one in St. Louis and the other in Lemay.

The company said that two projects will be ready in this calendar year. They are the opening of a casino adjoining the Four Seasons Hotel on the island of Exuma in the Bahamas, and a new hotel at Aztar’s Evansville riverboat property.

Next year, the company plans to have its St. Louis project ready, assuming it gets regulatory approval and will complete expansions at Belterra in Indiana and L’Auberge in St. Charles, La.

Also, the 2008 schedule will include a rebuilt property at its Boomtown casino in New Orleans.

As for the Tropicana in Las Vegas, the company plans to spend the next two years designing a new facility that will utilize the entire 34-acre site.

Good news

Illinois gaming regulators gave good news to Penn National Gaming Inc. (PENN) when they said last week that the company would not have to divest itself of its riverboat casino in Alton.

The casino was part of a package that Penn National acquired when it purchased the assets of Argosy Gaming Co. (AGY). Approval of the acquisition by the Illinois Gaming Board had the stipulation that Penn National would sell off both Alton and a riverboat in Joliet.

Also, regulators agreed with Penn National that the sale of the Joliet riverboat would take longer than originally anticipated so they extended the sale deadline to June 30, 2008.

The extension motivated gaming analyst Harry Curtis of JP Morgan to raise his rating of Penn National from neutral to overweight.

Penn. Licenses

Companies from around the world responded to a call for applications from slot machine manufacturers with the Pennsylvania Gaming Control Board making the request in two phases.

Granted licenses in response to the first phase were International Game Technology (IGT), WMS International Inc. (WMS), NRT Technology Corp., Aristocrat Technologies Australia Pty. Ltd., Aristocrat Technology Inc. and Western Money Systems.

Still being reviewed, the board said, were Shuffle Master Inc. (SHFL), Bally Gaming Inc., Atronic Americas, Konami Gaming Inc. and GTECH Corp., and its subsidiary, Spielo Manufacturing.

Respondents to the second phase included companies from the U.S., Japan, Germany and Great Britain.

THE INSIDER: Sen. Mark Pryor of Arkansas has joined Sen. Jon Kyl of Arizona in sponsoring legislation that would ban Internet gambling. The bill is being attached to an existing budget bill.

Five New Jersey casino workers have been selected to be jury members hearing a case involving the drug Vioxx and its manufacturer, Merck& Co. (MRK).

Progressive Gaming International Corporation (PGIC) has received approval from Gaming Laboratories International for the progressive version of its electronic table game product, TableMax, for use in licensed gaming markets in California.