Gaming briefs for August 11, 2003

Monday, Aug. 11, 2003 | 9:48 a.m.

Indian casino proposed

MINDEN -- The Washoe Tribe of Nevada and California has announced plans to build Northern Nevada's first tribal casino on a 25-acre site it owns along U.S. 395 just south of Carson City.

Plans call for the Golden Feather Casino to be managed by the Holder Hospitality Group, which owns six Nevada casinos, including the Silver Club Hotel Casino in Sparks.

Plans for the first phase include a 15,000-square-foot casino with 200 slots and a 24-hour restaurant, an RV park, gas station and convenience store.

The master plan calls for a 12,000-square-foot addition within five years, and 40,000 square feet of gambling with 900 slots and a buffet within a decade.

Casino revenue will provide the tribe's nearly 2,000 members with scholarships, health care, senior citizen meals, cultural resource protection and language preservation, officials said.

Nevada's largest tribal casino -- the Avi Resort & Casino south of Laughlin -- opened in 1995. The state's first tribal casino, it's operated by the Fort Mojave Indian Tribe, with about 1,100 members in Nevada, California and Arizona.

Agency downgrades ratings

The Standard & Poor's rating agency Friday lowered its corporate credit and senior secured debt ratings for Riviera Holdings Corp. to "B" from "B+" following the company's second quarter results last month.

The downgrade of Riviera Holdings, which owns the Riviera casino resort in Las Vegas, indicates "a prolonged period of weak credit measures and the expectation that these credit measures will not improve meaningfully in the near term," S&P credit analyst Peggy Hwan said.

For the quarter ended June 30, cash flow declined 15.6 percent from a year ago due to declines in gambling revenue at both Las Vegas and Colorado properties. Debt leverage and cash flow coverage of interest expense weakened as a result, S&P said.

The company carried $218.6 million of debt as of June 30.

"Given operating trends, Standard & Poor's does not expect credit measures to materially improve during the next several quarters," the agency said.

The ratings reflect Riviera's high debt leverage and relatively small portfolio of two casinos, with the Riviera Las Vegas "being an older property that is located well north along the Las Vegas Strip."

Supplier's earnings increase

Gambling chip maker Paul-Son Gaming Corp. earned $1.2 million in the second quarter, or 16 cents per share, primarily due to last year's merger with a French casino supplier. That compares to a loss of $650,000, or 16 cents per share, for the same period a year ago.

The Las Vegas company had about 7.6 million shares after the merger, up from about 4.1 million shares. Second-quarter revenue rose 153 percent, to $10.4 million.

Higher revenue, lower cost of revenue as a percentage of the total and strengthened gross profit margins helped boost earnings during the quarter, Paul-Son President and Chief Executive Gerard Charlier said.

Last year, Paul-Son Gaming merged with Etablissements Bourgogne et Grasset, a privately held casino chip maker. The "reverse merger" established B&G as a subsidiary of Paul-Son, though B&G's shareholders now own a majority of the company's outstanding shares and Charlier assumed the top post from Paul-Son head Eric Endy.

"We are very pleased by the company's swing to profitability," Charlier said. "We continue to make progress integrating our operations and enhancing operating efficiencies following last year's business combination."

Besides the merger, company revenue received a boost from two significant orders including $1.2 million from a U.S. casino and $1.9 million from a customer in Asia, the company said. Offsetting the increases was a reduction in European sales due to a run-up in sales last year prior to the conversion to Euro-denominated chips.