Pinnacle set to build La. casino

Friday, Aug. 15, 2003 | 10:55 a.m.

SUN STAFF AND WIRE REPORTS

Pinnacle Entertainment Inc. of Las Vegas plans to begin building a $325 million casino resort in Louisiana within 10 days, the company's chief executive says.

The license for the riverboat that will be at the center of the complex is the 15th and final dockside gambling permit allowed by Louisiana law.

During a conference call Thursday to discuss the company's second-quarter earnings, Pinnacle Chief Executive Dan Lee said the project would take about 18 months to build and would likely open during the first quarter of 2004.

The Las Vegas-based company owns five U.S. casinos in Indiana, Reno, Bossier City, La., New Orleans and Biloxi, Miss. The company also owns two casinos in Argentina and receives lease income from two card clubs in California.

Lee said Pinnacle estimates the Lake Charles, La., resort will generate about $60 million a year before interest, taxes, depreciation and amortization. The complex will have a 700-room hotel, meeting space for conventions and a golf course.

Pinnacle will compete in Lake Charles with a pair of two-boat casino complexes, a slot-machine casino at the Delta Downs race track in Vinton and an Indian reservation casino at Kinder.

Thursday, Pinnacle said its losses narrowed in the second quarter, with strong performance at the company's New Orleans and Indiana casinos driving gains and improved revenue at its Bossier City, La. property. Still, higher than expected interest expenses cut into profit.

Pinnacle's net loss fell to $2.4 million in the second quarter from a $6.4 million loss in the same quarter of last year. On a per share basis, the company reported a loss of 9 cents compared to 25 cents.

Revenue increased 6 percent to $133.6 million.

Cash flow grew 45 percent to $20.8 million. Not counting the one-time charges, cash flow would have been flat with the prior quarter.

Banc of America Securities analyst David Vas estimated that new competition hurt July casino revenue at the company's Reno and Bossier City properties by about 10 percent to 15 percent each.

"We have been neutral on the shares since last August, given our outlook for tougher competition at Reno and Bossier City as well as our concerns about legislative risks in key states," Vas wrote in a research note to investors Thursday.