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Argosy poised to close Empress riverboat deal

Apr 10, 2001 10:20 AM

The bidders are approaching the finish line in their quest for Jack Binion’s Empress Casino in Joliet, Ill., and in the opinion of some Wall Street observers Argosy Gaming Co.’s $460 million may have clinched the deal.

According to analysts at Bear Stearns, UBS Warburg and other financial institutions, Argosy, which trades under the symbol of AGY, took the lead in the high-stakes auction with its most recent bid.

Neither the company nor the seller would comment, but analysts said the property, which is in the heart of the seven million people Chicago market, would be "a perfect fit," for Argosy, whose riverboat successes in Indiana, Illinois, Missouri and Louisiana, have moved the company into a leadership position in the riverboat industry.

Without admitting that he has been in negotiations with Jack Binion, Argosy CEO Jim Perry did admit that his company was interested in the project. Binion, who failed to receive approval for a license from Illinois regulators, has until June to dispose of the property.

In recent months, Argosy has been busy buying out its two partners in the Lawrenceburg, Ind., riverboat casino.

Acquisition on hold

Penn National Gaming Inc. (PENN) says it has failed to receive approval from the Chippewas of Mnjikaning First Nation for its acquisition of CRC Holdings Inc. CRC has a management contract for the Chippewas Casino Rama.

In order for Penn National to complete its purchase of CRC Holdings, Inc., the company, must receive the Chippewas endorsement for the change of control. Penn National has said it will pursue every option regarding the takeover.

Despite the hangup, Bill Schmitt, chief gaming analyst for CIBC World Markets, has reiterated his strong buy rating for the stock.

And then there were two

Only two competing groups remain in the running to acquire the New York City Off-Track Betting Corp. They are the New York Racing Association consortium and the partnership of Magna Entertainment Inc. (MEIC) and Greenwood Racing.

The NYRA originally filed as a sole bidder but recently it joined hands with both Churchill Downs Inc. (CHDN) and its partner, Television Games Network, a subsidiary of Gemstar-TV Guide.

New York Mayor Rudy Guiliani started the process when he announced that the city was tired of owning "the only bookmaker that loses money." Some six competing bidders then announced their interest but the groups in competition have dwindled.

It’s expected that the deal could be worth upwards of $400 million.

Another acquisition

Continuing its assault on the racing industry, Frank Stronach’s Magna Entertainment Inc. (MEIC) has completed its acquisition of Ladbroke’s Pennsylvania racing operations and its Call A Bet home betting system.

The $53 million purchase from the prominent English bookmaking and hotel company will be accomplished by the payment of a third in cash, the transfer of 3.178 million shares of the company and a third in promissory notes to be paid on the first and second anniversary dates of the transaction.

Commenting on the acquisition, Stronach, whose company owns six other U.S. racetracks, said: "The acquisition of the Call A Bet account wagering system, together with Ladbroke’s other Pennsylvania horse racing operations, is an important step in MEC’s strategic plan of building the premier account wagering business in the country. By acquiring the existing Call A Bet system, which already has a profitable operating history, MEC will significantly advance its electronic media strategy and realize an immediate improvement in its earnings per share."

Restating financials

Now that JCC Holding Co. has emerged from Chapter 11, Harrah’s Entertainment Inc. (HET), which owns 43% of JCC Holding’s New Harrah’s Casino, will amend its annual report to be filed later this month.

Under accepted accounting practices, Harrah’s was required to report separate financials statements for the affiliate. The company said in a filing last week that it had recorded reserves of $220 million for receivables it doesn’t expect to recover in the casino’s reorganization plan. The reserves were in addition to Harrah’s equity pick-up of $46 million in the casino operating losses for last year.

Security in place

American Society for Industrial Security (ASIS) has become an official education partner for Global Gaming Expo (G2E), to be held at the Las Vegas Convention Center on Oct. 1-3.

ASIS, the largest international organization of security practitioners, also will sponsor a surveillance panel on internal investigations and casino and slot cheating scams and a risk management panel on mitigating losses in casinos, risk and insurance practices, and safety and OSHA requirements.

Following the G2E on Oct. 4, ASIS will present a full-day session for the G2E Training & Development Institute. Among the topics are: How to Train Casino Surveillance Personnel Through an Innovative Training Session; Eject, Evict, Trespass & 86; Dealing with the Unwanted; South African Security Concerns; How Threat Levels Have Increased, and Technical Applications & Equipment.

THE INSIDER: William Schmitt, chief gaming analyst for CIBC World Markets has reduced his earnings per share first quarter estimates for Ameristar Casinos (ASCA) from 23 cents a share to 17 cents a share. However, he has maintained his buy rating on the stock.

Goldman Sachs gaming analyst Steven Kent has raised his rating on Park Place Entertainment Corp. (PPE) from market perform to market outperform. He noted that the company’s share price has dropped significantly and that the company is entering its strongest season.

New Mexico Gov. Gary Johnson used his pen to make it official: the state’s racetracks can increase its slot machine count to 750 units.

GTECH Holdings (GTK) said in its annual financial report that its expects its year-over-year service revenue growth to be between 3% and 4%.

The Hilton Casino Resort of Atlantic City has received approval for a 215-space parking facility to assist in relieving the parking congestion for both its casino and its hotel.

Nevada Gold & Casinos Inc. (UWIN) announced that its board of directors had authorized a plan for the repurchase of up to 500,000 shares of the company’s common stock.

PDS Financial Corporation (PDSF) has signed an agreement with Action Gaming Inc. that will allow the company to expand its line of proprietary digital table games.

Workers at Greektown Casino in Detroit, Mich., have chosen Detroit Casino Council as their union representative.

The Gaming Manufacturers Association (GAMMA) has announced that it has changed its name to the Gaming Standards Association (GSA).

Innovative Gaming Corporation of America (IGCA) said Monday it had filed a lawsuit against Shuffle Master Inc. (SHFL) alleging that Shuffle Master had misappropriated IGCA’s proprietary Linux gaming machine operating platform.