Thursday, May 1, 2003 | 11:18 a.m.
A poker bar operator who terminated an agreement to buy the Four Queens a year ago has resurrected a deal to purchase the downtown Las Vegas property.
Terry Caudill, the owner of the Magoo's chain in Las Vegas, on Tuesday signed an agreement to purchase all of the stock of Elsinore Corp.'s Four Queens subsidiary for $20.5 million.
The agreement, which is about $1 million less than Caudill's previous offer, marks the third time in four years that Elsinore has struck a deal to sell the 690-room hotel-casino. The company's majority owner is expected to issue written consent for the sale around the end of the month. The deal is subject to approvals by Nevada gaming regulators.
In June 2002 Elsinore terminated a purchase agreement with Caudill's holding company SummerGate Inc., which issued its own termination notice.
Observers familiar with the deal cited uncertainty surrounding upcoming labor contract negotiations with the Four Queens, though others say financing may have been an issue. Elsinore -- along with several other separately owned downtown casinos -- was negotiating a contract with the Culinary Union as Caudill was preparing to buy the property.
Caudill could not be reached for comment by press time to talk about the future of the property and representatives of his gaming holding company TLC Casino Enterprises Inc. declined comment, referring calls to Caudill.
Elsinore President Philip Madow did not return a call for comment. A voicemail message at the property said the company would not comment beyond a statement released Wednesday.
Last year's purchase agreement said Caudill intended to retain the entire Four Queens staff.
Caudill owns 15 various gaming and restaurant establishments in Southern Nevada including Magoo's, Loose Caboose, Chicago Brewing Company and Hurricane Harry's.
He is also known as a local success story, said David Atwell, owner of Resort Properties of America in Las Vegas and a commercial broker involved in the sale.
Caudill, a former math teacher and dealer, started the Magoo's chain in 1989 and served as corporate vice president and chief accounting officer for Circus Circus Enterprises Inc. for 11 years. He left Circus Circus, the predecessor to Mandalay Resort Group, in 1994 to concentrate on Magoo's.
He has been interested in buying an area casino for more than a decade, Atwell said.
Caudill's timing is fortuitious, with an upscale outlet mall to be opened downtown this year by Chelsea Property Group and Simon Property Group and the nearby World Market Center furniture retail center scheduled to start construction this year, he said.
"Two major projects on land that was vacant when I was a kid ... are very dramatic," said Atwell, who grew up downtown and whose father, Cecil, owned motels in the area.
"I believe (Caudill) is dedicated to bringing a resurgence downtown," he added.
Philip Flaherty, chief gaming officer for Barrick Gaming Corp., said he applauds investors with an "aggressive marketing interest" in downtown.
Barrick is a startup company that recently announced plans to buy four downtown casinos from gaming pioneer Jackie Gaughan.
"We welcome anyone who has a forward vision of downtown Las Vegas as we do because we're looking for a collective dynamic," Flaherty said.
During his licensing approval process last year, Caudill told regulators that more public relations was needed to draw locals downtown.
He also said casino owners should support the Fremont Street Experience, which would become an "integral part" of the marketing campaign for the Four Queens.
Like other properties downtown, the Four Queens offers limited growth prospects because it cannot expand outward and has a difficult time trimming operating costs, Flaherty said.
Still, he said, the Four Queens generates a healthy cash flow and has been able to maintain a loyal customer base over the years amid stiff competition.
"I don't think an investor who has been able to get hold of it could go wrong. (Caudill) is a good marketer for slots, so I think it's a good thing."
Caudill was licensed by Nevada regulators last year as Four Queens president, secretary, treasurer and director. That license has since expired, requiring Caudill to file a new application with the state Gaming Control Board, his Las Vegas attorney Greg Giordano said. The Four Queens would not need a new license but Caudill's TLC Casino Enterprises would require licensing as a holding company for the casino, he said.
Similar to the previous offer, proceeds from the sale would be used to pay the debts of the Four Queens and Elsinore as well as paying any accrued and unpaid dividends due to holders of the company's preferred stock. Elsinore intends to dissolve the company after the sale.
In March 2002 the Four Queens announced it would sell virtually all of its assets to SummerGate Inc. for $22 million plus an estimated $4 million in debt from Elsinore. The deal was supposed to close in May but delays by the Securities and Exchange Commission meant Caudill would lose some tax advantages from the deal. Elsinore then agreed to lower the price to $21.5 million and extend the termination date to June, 30, 2002.
Slot supplier PDS Financial Corp. of Las Vegas offered to buy the property for $30 million in 2000 but retreated when it was unable to come to terms with Elsinore. Years earlier, investor Allen Paulson offered to acquire Elsinore for $54 million, a deal that would have been simultaneous with a deal to buy Riviera casino owner Riviera Holdings Corp. for $250 million. That deal was called off in 1998. The Riviera held options years ago to purchase shares in Elsinore but those have since expired.
Elsinore is incorporated in Nevada but has corporate offices in New York. The company, which has tried to pursue casino management contracts with Indian tribes, holds a license to distribute the game "Multiple Action Blackjack" to casinos in New Jersey. The future of that business couldn't be determined Wednesday.
The Four Queens opened in 1966 and features a casino floor of about 32,000 square feet with more than 1,000 slot machines. It also contains about 14,600 square feet of meeting space, five restaurants, three cocktail lounges and a gift shop.
The property sits next to the Golden Nugget Hotel & Casino on about 3.2 acres, of which more than two acres are leased from various owners.
Elsinore reported a profit of $1.2 million last year compared with a loss of $13.6 million in 2001 related to a one-time impairment loss of $13.2 million on the purchase agreement, according to the company's latest financial statement. The company earned $6.3 million the previous year. Net revenue totaled $54.9 million last year compared to $52.8 million the prior year.
