Ameristar rules out sale for now

Published 12:06 pm Tuesday, December 14, 2010

A sale of Ameristar Casino’s parent company is no longer under consideration as an option to build up its stock value, a committee of its Las Vegas-based board of directors announced this morning.

The news was received positively by marketing officials at the companies’ eight casinos, said Bess Averett, public relations manager for Ameristar Casino Hotel Vicksburg.

In August, selling the company was mentioned as a viable alternative to buck up profits in light of a depressed economy that has hit the gaming industry hard. Now, directors said, Ameristar will look at various other alternatives to keep itself profitable, though declined to specify them in the release.

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“Ameristar Casinos Inc. announced today that as part of its evaluation of strategic alternatives to enhance stockholder value, the transaction committee of its Board of Directors is no longer considering a possible sale of the company since a sale is not in the best interests of the Company and its stockholders at this time,” the one-paragraph release said. “While a sale transaction is no longer actively being considered, the transaction committee will continue to explore other avenues to enhance stockholder value, including the continued execution of the company’s existing business plan which the Committee believes will provide meaningful opportunities to maximize profitability and enhance stockholder value going forward.”

Ameristar’s stock fell $1.72, or 9.6 percent, to $16.18 in morning trading today. Details on what alternatives the board of directors will consider will not be disclosed “unless and until its Board of Directors determines there is a material need to update the market,” the company said.

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. Tax issues have been prominent as a possible reason, but the U.S. Senate is set to consider legislation that would include a lower tax on inheritance.

The company hired financial and legal advisers when it announced it might be sold.

The local property, also Vicksburg’s largest gaming venue, employs 824 people at the casino, hotel, RV park and a gas station the casino owns, according to data supplied to the Mississippi Gaming Commission.

Third-quarter net income fell 18 percent as higher expenses and promotional allowances offset modest revenue gains, according to the company’s quarterly report filed with the Securities and Exchange Commission.

Ameristar has been the area’s largest and market share casino leader since it opened in 1994. Three of the city’s four casinos that opened in 1993 and 1994 since have changed hands.

DiamondJacks, which opened as the Isle of Capri and was sold in 2006, was Vicksburg’s first casino, opening in August 1993. Isle re-entered the Vicksburg market in May, purchasing Rainbow, off Warrenton Road. Riverwalk Casino opened next door to Rainbow in 2008, becoming the city’s fifth casino.

Horizon Casino, the second to open in Vicksburg, as Harrah’s in 1993, is being sold by parent company Tropicana Entertainment to Delta Investments & Development LLC for $3.25 million in cash plus certain liabilities associated with the casino, Tropicana officials said in a release last week.