NevStar seeks funds to pay builder

John Wilen

Tuesday, Feb. 23, 1999 | 10:03 a.m.

A.F. Construction Co., the general contractor that built NevStar Gaming and Entertainment Corp.'s Mesquite Star hotel-casino, sued the company in state District Court, claiming it is owed $853,500 in unpaid construction costs.

Brent Duncan, NevStar's chief financial officer, agrees that the money is owed, and says the company is trying to obtain a loan to satisfy the debt.

"We're in the process of restructuring the mortgages on that property to fully pay off A.F. Construction," said Duncan.

Overall, the Mesquite Star cost $5.45 million to build. The total project cost, including construction, land acquisition, permits and licenses, equipment and hiring, was about $23 million, said Duncan.

Last May, NevStar issued A.F. Construction a $600,000 promissory note to cover "extra" construction costs. These extras later pushed the costs to $853,500, said Duncan. As part of its agreement with A.F. Construction, NevStar issued A.F. Construction 15,000 warrants to purchase company common stock for $2.25 per share -- at that time a 35 percent discount -- and to offer an additional 7,500 warrants per month the debt went unpaid.

In August, A.F. Construction filed a mechanic's lien against the property. In August and September, A.F. Construction subcontractor Leo Cook, who does business as Master Plumbing & Mechanical, filed two duplicate mechanic's lien's against the property for $240,300 each. That amount is included in the $853,500 owed A.F. Construction, says NevStar.

Duncan said A.F. Construction had to sue NevStar to protect its rights and interests against other claims, such as that filed by Cook. A.F. Construction attorney Elissa Lavelle declined to comment on the timing of the suit or on negotiations Duncan said are ongoing between NevStar and A.F. Construction.

Duncan said A.F. Construction did "a great job" on the Mesquite Star, and hopes to use the company on future construction projects.

NevStar recently went to court to win the right to build a casino and entertainment complex in North Las Vegas.