Sale could be in the cards for AmeristarPublished 12:30am Saturday, August 14, 2010
A sale of Ameristar Casino’s parent company was mentioned as a possibility this week by its Las Vegas-based board of directors, but shouldn’t affect daily operations at its Vicksburg property on Washington Street, a spokesman said Friday.
“What I can tell you is it’s not new news to us,” said Bess Averett, public relations manager for Ameristar Casino Hotel Vicksburg. “It’s been a possibility for some time.”
In a release, the board said it is “evaluating strategic alternatives to enhance stockholder value,” including selling the company. Lazard and Bank of America Merrill Lynch have been hired as financial advisers and Gibson, Dunn & Crutcher LLP as legal adviser to assist the corporate board’s transaction committee. The release followed a report Wednesday in the New York Post that mentioned a possible sale.
Talk of a sale has persisted since 2006 when founder and chief executive Craig Neilsen died. His estate, including a 50 percent stake in Ameristar, went to a foundation for spinal cord research. Analysts have theorized tax issues are in the background of the most recent chatter. Current law could dictate a 55 percent estate tax if the estate’s shares aren’t sold by the end of this year. Casino operators Boyd Gaming, Pinnacle Entertainment Inc. and Penn National Gaming have been mentioned as potential suitors for Ameristar.
Any buyer stands to inherit the company’s move, announced in July, to extend health care benefits usually reserved for full-time employees to part-time workers. Ameristar would pay half of premiums for part-timers and their dependants. The local property, also Vicksburg’s largest gaming venue, has hired seven employees this week and employs 835 people at the casino, hotel, RV park and a gas station the casino owns, Averett said. A breakdown of full- and part-time workers was not available, Averett said, but said most workers at the casino were “excited” about the limited benefit health plan.
Changes have been the norm at Ameristar’s Vicksburg property since August 2008, when the first of three work force and labor hour reductions hit. A year later, one dining venue was closed, while an upscale eatery featuring oysters and seafood was downsized somewhat into a bakery/cafe serving specialty pizzas and sandwiches. Both restaurants had been part of Ameristar’s $100 million expansion, also notable for the multilevel parking garage.
The company reported a net financial loss in this year’s second quarter totaling $24.9 million. Executives blamed a bridge closing near its East Chicago property as the prime culprit. Ameristar had reported a $14.3 million profit for the second quarter last year. Revenue fell 5 percent to $293 million, less than analysts’ prediction of $305 million. In the report, CEO Gordon Kanofsky indicated Vicksburg was among the company’s safer markets.
“As we look into the third quarter, we are optimistic regarding the performance of the properties in our more stable markets, including Kansas City, Council Bluffs, Iowa, and Vicksburg,” Kanofsky said. Ameristar also operates casinos in St. Louis, Black Hawk, Colo., Jackpot, Nev., and St. Charles, Mo.
A sale of the parent company would mark the last of Vicksburg’s first four casinos that opened in 1993 and 1994 to change hands since gaming was legalized in Mississippi in 1990.
Ameristar opened in 1994 in its current site near the Mississippi River bridges. The city’s first casino, Isle of Capri, opened in 1993, and in 2006 sold holdings in Vicksburg and Bossier City, La., to privately-held Legends Gaming, which changed the casinos’ names to DiamondJacks. In May, the company return to Vicksburg was approved when its purchase of Rainbow Casino was OK’d by state regulators. Horizon Casino was opened originally by Harrah’s in 1993. Riverwalk Casino opened next door to Rainbow in 2008, becoming the city’s fifth casino.