Hollywood Park to sell two Mississippi properties

Thursday, Nov. 18, 1999 | 11:20 a.m.

A gaming analyst boosted his target price for Hollywood Park Inc. stock today after the company said it plans to sell two Mississippi casinos.

BancBoston Robertson Stephens Inc.'s Harry Curtis said that, if consummated, the sales will help diversify the assets of the Inglewood, Calif.-based company that recently sold the Hollywood Park racetrack.

"The company's execution of its diversification strategy underscores our confidence in Hollywood Park's management," Curtis said, adding that the strategy "should enhance investor expectations in the future."

Curtis said Hollywood Park stock is trading at only 5.3 times estimated cash flow for 2000, and boosted his target price for the stock to $28 a share from $25. The stock was quoted at $18.875 a share, down 37.5 cents, in midday trading today.

The company said Wednesday it has signed a letter of intent to sell its Casino Magic hotel-casino in Bay St. Louis, Miss., and its Boomtown casino in Biloxi. It didn't identify the buyer or the price for the properties, but said it is negotiating a definitive agreement.

The two properties are being impacted by increased competition in the Gulf Coast market. Hollywood Park acquired Casino Magic Inc., which owned two Mississippi casinos, one in Louisiana and one in Argentina, for $340 million 20 months ago.

Two months ago, it sold the Hollywood Park Race Track and Hollywood Park Casino in California to Churchill Downs Inc. for a net pre-tax gain of $61.5 million. It leased the casino for 10 years and sublet it to a third-party operator.

Hollywood Park also has agreements to sell 139 acres in Inglewood for after-tax proceeds of $57 million. The company is building a $165 million hotel-casino and golf complex called the Belterra Resort in Vevay, Inc., about 35 miles from Cincinnati.

Including the two casinos it plans to sell, Hollywood Park now operates eight casinos and one horse racing track, and subleases two card casinos in Nevada, Mississippi, Louisiana, California, Arizona and Argentina. It has also applied for the 15th and final gaming license in Louisiana.