Gaming briefs for Nov. 3, 2003

Monday, Nov. 3, 2003 | 8:49 a.m.

Company settles lawsuit with riverboat operator

Boyd Gaming Corp. agreed to pay $375,000 to settle a lawsuit filed in 1998 by Astoria Entertainment Inc., according to a filing with the Securities and Exchange Commission.

The Louisiana gambling boat operator filed two lawsuits against Boyd Gaming Corp. after Astoria failed to obtain a casino license in the state. Boyd operates a casino and a racetrack casino, or racino, in Louisiana.

Federal claims against Boyd were dismissed with prejudice by the federal court in August 2001. The state law claims brought in the federal suit were dismissed without prejudice, allowing Astoria to assert these claims in state court, Boyd said in the SEC filing.

Boyd spokesman Rob Stillwell said the company is barred by a confidentiality agreement from discussing the contents of the suit and the settlement.

Resort posts another loss; upgrades still planned

The Castaways hotel-casino lost $1.2 million in October and is projected to lose another $1 million this month, a recent filing in U.S. Bankruptcy Court said.

The property, which filed for Chapter 11 bankruptcy in June, had secured $2 million in emergency financing to keep its doors open. Owner VSS Enterprises LLC has not yet filed a reorganization plan with the court, which has the option of forcing the property into a Chapter 7 liquidation process.

Before filing for bankruptcy, the owners of the Castaways had hoped to complete the upgrades required by Holiday Inn to join the franchise. The company still hopes to move forward with those plans once reorganization is complete.

Since the bankruptcy filing, the Castaways has posted losses of $3.6 million based on revenue of $7.7 million and expenses of $11.3 million.

The Castaways listed total assets at $72.3 million, including property and equipment worth $65.5 million, said the court document dated Oct. 20. The hotel-casino itself is estimated to be worth $57.9 million.

Analyst downgrades stock, raises target price

A securities company that follows the gaming industry has lowered its rating on Wynn Resorts Ltd. stock and has increased a 12-month target price for the issue.

Banc of America Securities analysts J. Cogan and David Vas issued a report Thursday lowering the rating of Wynn stock from "buy" to "neutral" and placed a target price on the issue of $23.

Wynn is building a resort on the Strip due to open in April 2005, but has delayed construction on a casino in Macau until credit and tax legislation is approved by Chinese lawmakers.

In their report, Cogan and Vas said the long-term outlook for the stock is favorable, but that because Wynn's resort in Macau may take longer to open than originally expected, they moved to the "neutral" rating.

"Let's be clear here," the report says. "We remain optimistic about Wynn's longer-term outlook. For example, since initiating coverage, we're increasingly comfortable with the Las Vegas opportunity (Wynn Las Vegas) and while operating and tax reforms have taken longer than expected to transpire in Macau, we have been pleasantly surprised by the significant growth in the market spurred by recent Chinese visitation reforms."

The report also says investors already have seen the stock increase significantly on anticipation for Macau. The report projects negative cash flow and losses in 2003 and 2004.

The stock closed Friday at $20.16, down 94 cents.