Junk bond offering for Pinnacle deal pulled

Thursday, Dec. 14, 2000 | 11 a.m.

The $1.3 billion marriage between Harveys Casino Resorts of Lake Tahoe and California-based Pinnacle Entertainment Inc. was postponed indefinitely today, after Harveys took a huge junk bond offering off the calendar.

PH Casino Resorts Inc, an affiliate of Harveys, was supposed to price $625 million in 10-year notes today in the largest junk bond offering in months. Proceeds of the sale would have helped Harveys close on the Pinnacle deal. PH Casino hoped to price the bonds to yield 11.5 percent to 11.75 percent.

"Gaming paper has outperformed other high-yield bonds during this market, but it's still a considerably sized transaction in a skittish market," said Steve Altman, gaming analyst with Duff & Phelps Credit Rating Co. in Chicago. "The yield was getting up there, and at some point it just becomes uneconomical to raise capital at that level."

In a press release issued today, PH Casino emphasized that its deal to acquire Pinnacle "has not been terminated, and remains in full force and effect."

"Harveys intends to continue to evaluate the prospects for the transaction, but cannot assure that a transaction will be consummated," the press release said.

Harveys is controlled by Colony Capital of Los Angeles. Publicly-held Pinnacle is the owner and operator of the Boomtown and Casino Magic chains, with properties in Mississippi, Louisiana, Indiana and Nevada.

By midday on Wall Street, Pinnacle stock had plunged $5.75 to $15.63.

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