Herbst Gaming, which operates several casinos and a slot route that services their gas stations and convenience stores, said last week it had retained financial advisers Goldman Sachs & Co. to evaluate strategic alternatives ranging from refinancing to the sale of some or all of the company’s 14 casinos in three states.
The move comes in the wake of a Nevada smoking ban, which has severely impacted revenues in the company’s slot route operations.
Herbst Gaming is privately owned by three brothers, Ed Herbst, who serves as president and CEO, and Tim and Troy Herbst.
"The company has a long history of providing gaming services in Nevada, and we believe in the strength of the Terrible’s brand," said chairman, president and chief executive Ed Herbst, in a statement released last week. "However, the recent impact from the Nevada smoking ban and general economic weakness has required us to explore our alternatives.
"We are confident that our retention of a financial adviser will help us capitalize on the strength of our brand and position the company to maximize long-term value."
According to published reports, company revenues are growing through acquisitions, but Herbst’s latest financial filing reported a net loss of $34.1 million for the nine months that ended Sept. 30, compared with net income of $36.7 million the prior year.
In addition to the Nevada smoking ban, the company attributed the decline to revenue declines in Iowa and lower than expected revenues at several newly acquired properties in Primm.
Herbst operates 16 casinos in Iowa, Missouri and Nevada, including small casinos in Henderson, Pahrump and Searchlight, and Terrible’s Casino on East Flamingo — the former Continental Hotel/Casino.
Last year, Herbst bought Sands Regent, which included four Northern Nevada casinos including the Sands Regency Casino in Reno.
Later, Herbst bought three Primm Valley resorts at the Nevada-California border from MGM Mirage.
Herbst’s slot machine route operation business includes more than 7,000 slot machines inside some 700 restaurants, taverns, convenience stores, bars and grocery stores.