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Bankrupt President’s future: Sale of two boats

Sep 3, 2002 9:09 AM

In gaming, the House usually wins, but not always.

Case in point is President Casinos Inc. (PREZ), a gaming company that it trying to find its way out of bankruptcy. So far, the company’s efforts have been unsuccessful.

Respected gaming debt analyst Andrew Zarnett of Deutsche Bank Alex. Brown in New York, sees little hope for the company’s survival. "I think the finale for President," he says, "is the sale of both properties.

The company operates two properties: the President Casino on the Admiral near St. Louis, Mo., and the President Casino in Biloxi, Miss.

When the company filed its bankruptcy petition last June it listed assets of $87.9 million and debts of $131.1 million.

St. Louis officials have development plans for the Laclede Landing area where the President boat is moored. They have been hoping that one of the larger gaming companies would find the area attractive and take over the President’s operation. So far, there have not been any public bidders for the company, even though officials note that the President’s St. Louis operation has been profitable.

Also important to the city are the 800 employees of the Admiral and the $8.2 million it generates for the city’s tax coffers.

But, bad business decisions have placed the company against the ropes, fighting to overcome a failed project in Tunica, Miss., and its inability to win licenses in Louisiana and several other states.

Although there has been nothing official, people affiliated with the nearby Casino Queen, have been eyeing the fact that the Admiral, at least, has been able to remain profitable and has potential for increasing business.

Zarnett noted that big casino operators were unlikely to bid for President’s operations but he saw several potential bidders for the Admiral.

Going it alone

Reno-based GameTech International Inc. (GMTC), a leading supplier in the electronic bingo industry, has terminated its distribution agreement with Trend Gaming Systems LLC of Texas.

The company said it expected that the end of the arrangement might cause some short term disruption but "we believe this action positions our company to substantially improve our customer service."

The announcement came on the heels of the release of the company’s third quarter results. During the period ended on July 31, the company had net income of $1.1 million or $0.09 a share compared to a net loss in the comparable quarter of $617,000 or $0.06 a share.

For the first nine months of the fiscal year, the company said it had posted net income of $3.1 million or $0.27 a share. Last year, during the first nine months the company had a net loss of $372,000.

A Saudi gift?

Saudi officials denied last week that The Thoroughbred Corporation, owner of War Emblem, winner of the Kentucky Derby and the Preakness Stakes, was going to be given to the victims of the Sept. 11 terrorist attacks.

Owner of The Thoroughbred Corporation, Prince Ahmed bin Salman, reportedly died last month in Saudi Arabia at the age of 43. His extensive racing operation, directed by its president, Richard Mulhall, and trained for the most part by Bob Baffert, have been operated recently by Prince Faisal, younger brother of Prince Ahmed.

In a front-page article in the New York Times, a Saudi source claimed that the Saudi royal family was considering giving the horse to the attack victims’ families. Because of the horse’s successes, his current value would run into the millions.

Mulhall said he had called Prince Faisal about the Times article and was told the royal family knew nothing of the suggestion and that the newspaper article was without foundation.

New technologies

Officials of the Greektown Casino in Detroit, Mich., are hoping that the introduction of three new technologies will go a long way to enhance the entertainment experience of its customers.

Recently introduced on the casino floor were: casino/hospitality carts that serve carbonated beverages using no batteries or electricity; coin redemption machines that shorten how long guests must wait to cash out, and cashless slot machines.

The carbonated beverage dispenser, powered by a CO2 cylinder, was designed by Sterling Beverage Systems for the airline industry but the company has since modified the units to serve the hospitality industry.

Patent ruling

Scientific Atlanta Inc. (SFA) has won a summary judgment in a patent suit filed against them by Gemstar-TV Guide International Inc. (GMSTE), the parent company of TVG, the national home-betting simulcasting company.

The dispute revolved around the set-top boxes that Scientific Atlanta provides home viewers. Gemstar alleged that its patents for interactive programming guides for television were being infringed upon by Scientific Atlanta.

In June, an administrative judge ruled in favor of the set-top box maker and last week the International Trade Commission declined to review the previous ruling.

Now that Illinois lawmakers have increased gaming taxes, Harrah’s Entertainment Inc. (HET) has cancelled plans to build a $40 million hotel in Metropolis, next to its casino.

MGM MIRAGE employees have donated $1.9 million to its Voice Foundation charitable campaign.

Mandalay Resort Group (MBG) reported net income of $29.3 million or $0.41 a share, down from the $30.5 million or $0.40 a share reported during the second quarter of last year. The company said it was comfortable with the earnings estimates of gaming analysts which average about $0.51 a share for the third quarter.

Moody’s Investors Service has revised its rating of debt issued by Isle of Capri Casinos Inc. (ISLE) from negative to stable.