erbst representatives told the Gaming Control Board that Whiskey Pete's, Buffalo Bill's and Primm Valley would become the flagship properties in their expanding casino empire when the us$ 400 million deal closes in early April.
"To a large and successful company like MGM Mirage, these were secondary properties," Herbst Gaming general counsel Sean Higgins told the control board. "To our company, the Primm casinos will become core assets and treated as such. We plan on giving these properties the tools they need to compete in this market."
After upgrading Primm's casino offerings, such as adding newer slot machines and retail and spa facilities, Herbst representatives said, the Primm casinos would be marketed as an attractive getaway to Las Vegas customers. The three properties are 35 miles south of Las Vegas. The firm said a capital expenditure budget for the properties is still being determined.
Herbst plans to cross-market the Primm casinos through its off-Strip Terrible's Casino on East Flamingo Road and the more than 100 Terrible's gasoline stations and convenience stores around the valley. They include more than 2,600 hotel rooms and more than 13,820 sqm of casino space, along with the 6,000-seat Star of the Desert Arena at Buffalo Bill's and the Desperado, recognized in 1996 by the Guinness Book of World Records as the world's tallest roller coaster. They employ 2,900 workers, and Higgins said all would be retained.
Michael Puggi, president of the Primm casinos for MGM Mirage, will remain in the same position once Herbst takes over. He said the three casinos have been hurt by competition from the Southern California Indian casino market. In 2000, cash flow at the three properties was us$ 75 million but had fallen to the low us$ 30 million range by 2003. He said Primm's key audience is in Southern California, primarily residents of San Bernardino County, which has grown in population by 15 percent in the last few years.
The transaction will be the second major casino purchase by Herbst this year. In January, the company closed a us$ 119 million purchase of the Northern Nevada-based Sands Regent, which includes the Sands Regency in Reno, the Rail City Casino in Sparks and two smaller casinos. Higgins said the Rail City was being re-branded to include the Terrible's theme.
In addition to Terrible's, the company operates two casinos in Pahrump, one in Henderson and one in Searchlight. It also has riverboat properties in Missouri and Iowa. The company is one of the state's largest slot route operators, with more than 8,400 games in noncasino locations, such as grocery stores, drugstores, convenience stores, bars and restaurants. Higgins said the Primm deal will give the company 10,000 workers.
Herbst Chief Financial Officer Mary Beth Higgins told the control board the deal is being funded through an us$ 875 million credit facility, which was used to pay down company debt and fund the Northern Nevada casino purchase. She said the company will have about us$ 110 million to us$ 120 million in the credit facility after the Primm deal is complete.
Approval by the three-member control board was unanimous. The Nevada Gaming Commission will consider the matter March 22.