Gaming company to reduce debt

Wednesday, June 2, 1999 | 10:52 a.m.

Circus Circus Enterprises Inc. of Las Vegas plans to use profits from its Las Vegas gaming resorts to cut debt levels by at least 20 percent relative to cash flow, said company President Glenn Schaeffer.

Circus Circus, the fourth-largest U.S. casino company, opened its $950 million Mandalay Bay hotel-casino in March, helping to ignite a tourism boom in the gambling capital that has boosted profits at its other casino resorts, including the Luxor, Excalibur and Circus Circus hotel-casinos.

Circus Circus expects to reduce debt over the next few years to less than four times operating cash flow from about five times now. The lighter debt load will make it easier to finance casino projects planned in coming years, Schaeffer said. New projects will probably be on the Las Vegas Strip or in Mississippi, he said.

"We can afford to (pay debt) and buy some stock too over the next few years," Schaeffer told the Bloomberg Forum. "Then, we would be in a very good position to launch our next group of projects."

Schaeffer said the company's next Las Vegas resort, on land that Circus Circus owns south of Mandalay Bay, would be wholly owned by Circus Circus. That's a reversal of its plans last year to take on a joint venture partner to reduce its investment in the new resort. At that time, Circus Circus's profits were falling amid a slump in tourism to Nevada.

The company also will open its temporary casino in Detroit by September.

Circus Circus, owner of 28 percent of the hotel rooms on the Strip, has been one of the biggest beneficiaries of this year's Las Vegas revival, said Schaeffer. Tourists are coming to see Mandalay Bay, drawn in part by attractions like a tropical beach and pool with mechanically generated wages.

Mirage Resorts Inc.'s new Bellagio hotel-casino is also drawing more tourists to Las Vegas.

The slump that reduced Circus Circus profits over the past two years was an "aberration," Schaeffer said.