The owners of the Castaways Hotel Casino and Bowling Center, VSS Enterprises LLC, have taken the first step toward making the Boulder Highway property a public corporation.
The end of 2003 marked the completion of the first phase of the Castaways’ reorganization plan, which calls for registering and listing the company’s common stock on NASDAQ.
The company expects to complete the reorganization and file to list the equities for trading by the end of April 2004.
The hotel, formerly known as the Showboat, has struggled in recent years, mainly the result of heavy competition from other Boulder Strip casinos, namely Arizona Charlie’s East, Boulder Station and Sam’s Town.
The company’s reorganization plan first targeted cutting costs and streamlining operations. Last month, the company received court approval to raise up to $10 million in the form of Debtor’s Certificate secured notes in denominations of $25,000 from qualified investors.
The new borrowing power will be used to implement the build-up of the Castaways businesses, including the bowling center, which once hosted world-class tournaments.
The company plans to complete the raising of funds by mid February, after which time it will file its complete reorganization plan.
In the reorganization plan, the company is offering to exchange $30 million in debt into common stock at $22.50 per share. The company is offering the Debtor’s Certificate holders the opportunity to exchange their Debtor Certificates for common stock and warrants at a conversion rate of $7.50 per share.
Through the exchange of debt for equity the company’s audited net worth will increase to over $30 million, and therefore meet a critical requirement of NASDAQ.
The Castaways historically has generated revenues of $55 to $60 million, which represents about 9% to 10% of the Boulder Strip market. The property caters to the 319,000 residents living immediately adjacent to the casino and draws patronage for its 412-room hotel.
The 180,000-square-foot entertainment and convention facility includes the largest bowling facilities in the world.