Pioneer Finance to make partial payment

Monday, July 19, 1999 | 11:54 a.m.

A bankrupt subsidiary of Santa Fe Gaming Corp. of Las Vegas has received permission to make a $1.8 million interest payment on $55 million in outstanding junk bonds.

Pioneer Finance Corp. will pay 50 percent of the interest owed on its outstanding bonds for the period between Dec. 1, 1998 and May 31, 1999. The cash payment was approved by a bankruptcy judge. The bonds carry a rate of 13.5 percent.

Pioneer said it expects to make the payment before the end of July. Those bondholders who never consented to Pioneer's reorganization plans will have payments held in reserve until a final plan of reorganization is filed. About 75 percent of the bondholders consented.

Pioneer Finance filed for Chapter 11 bankruptcy in February, followed by sister company Pioneer Hotel Inc. in April. Pioneer Finance was forced into bankruptcy after missing a $60 million balloon payment on the bonds, issued in 1988. Pioneer Finance wants to exchange the bonds for new bonds due in 2006.

Santa Fe Gaming owns and operates the Santa Fe hotel-casino in Las Vegas and the Pioneer hotel-casino in Laughlin.