Castaways owners lose bid for Fitzgeralds

David Strow

Thursday, March 22, 2001 | 10:38 a.m.

Detroit businessman Don Barden has come one step closer to acquiring Fitzgeralds hotel-casino, following a bankruptcy court's approval of his plans to buy the struggling downtown Las Vegas property.

On Monday, a Reno bankruptcy judge approved Barden's proposal to acquire Fitzgeralds properties in Las Vegas, Tunica, Miss., and Black Hawk, Colo., for $149 million. Closing of the deal hinges on Barden's ability to obtain financing and to receive gaming licenses from Nevada, Mississippi and Colorado gaming regulators.

"We're very close on financing ... financing is not an issue on this deal right now," said Jef Bauer, vice president of marketing for Barden's Majestic Star Casino. "On the licensing end, we fully expect to be licensed and approved in all three states later this year. We're very optimistic it will move along quickly."

The owner of the three casinos, Las Vegas-based Fitzgeralds Gaming Corp., filed for Chapter 11 bankruptcy protection in December in connection with the sale to Barden. The move was pre-approved by the company's senior noteholders. Fitzgeralds had more than $270 million in debt as of Oct. 1, according to the company's last financial report with the Securities and Exchange Commission.

Two rival bids were submitted during the auction process by Las Vegas gaming interests. VSS Enterprises Inc., owner of the Castaways hotel-casino on the Boulder Strip, offered $11 million for the downtown Las Vegas property, while Terry Caudill, owner of the Magoo's tavern chain, offered $15 million.

"There were people interested in those three properties (other than Barden) ... they just were not interested in all three properties," said Jeffrey Truitt of KPMG, Fitzgeralds' financial adviser. "The Majestic Star offer was an all-or-nothing proposition."

Truitt said Fitzgeralds is still in talks with potential buyers for its Reno property, which is not included in the Majestic Star deal.

Barden is the only black businessman in the country who wholly owns a casino company. His purchase of Fitzgeralds Las Vegas would make it the only black-owned casino in the city.