Pinnacle to build Argentine casino

Wednesday, Aug. 13, 2003 | 10:47 a.m.

Pinnacle Entertainment Inc. of Las Vegas expects to build a casino, restaurant and nightclub complex in the province of Neuquen, Argentina, as part of a revised license agreement with the Argentine government.

The complex would replace a 22-year-old building located at the back of the parking lot of the regional airport in Neuquen.

Later phases may include additional hotel rooms, restaurants, movie theaters, bowling alleys and other entertainment features.

Grading has already begun on the project, which will be designed by Las Vegas resort architect and builder Marnell Corrao Associates.

Under the revised agreement, the company's concession to run the casino is extended to December 2016 provided that it builds the new facility using cash assets of its Argentine subsidiary plus the net income of its Argentine operations through 2006. The company receives a five-year extension, to 2021, if it invests another five million pesos (approximately $1.7 million) in a three-star hotel with a minimum of 10 guest rooms.

Through its Casino Magic Argentina subsidiary, Pinnacle runs casinos under exclusive licenses in Neuquen and the Andean resort community of San Martin de los Andes.

Pinnacle's Argentine operations yielded $4.4 million, $9 million and $7.1 million in operating cash flow in 1999, 2000 and 2001, respectively. Cash flow declined to $1.9 million in 2002 due to a weak Argentine economy and the devaluation of the Argentine peso relative to the dollar.

"The Argentine economy and currency seem to be stabilizing in recent periods," the company said.

Pinnacle's first quarter cash flow in 2003 was $600,000 versus $200,0000 for the same quarter of last year.

The agreement "allows us to reinvest our Argentine profits in expansion in Neuquen, knowing that Casino Magic Argentine will be an active part of that important community for the long term," Pinnacle Chief Executive Dan Lee said.