GAMING:

Herbst misses debt payment, again

Thursday, Dec. 4, 2008 | 5:31 p.m.

A Wednesday deadline came and went for Herbst Gaming to repay some $847 million in bank loans that were due in November, paving the way for lenders to force the company into Chapter 11 bankruptcy.

In a Securities and Exchange Commission filing today, Herbst said negotiations are continuing with lenders on a restructuring plan. Officials declined further comment.

Such a plan might buy the company more time, but the future isn't bright for Herbst, which owns the Primm and Terrible's casino chains and operates some 6,800 slot machines in Nevada restaurants, bars, gas stations and other high-traffic locations outside of casinos.

The economic downturn and an ill-timed purchase in 2007 of three Primm casinos contributed to losses of more than $101 million from January through September 30.

In addition to defaulting on its bank loans, Herbst also has defaulted on two bond issues totaling some $330 million, allowing bondholders to demand repayment. The company's agreement with bank lenders prevented Herbst from making payments on the bonds in the event of a default on the bank debt.

The bigger question is whether the Herbsts will be able to sell their casinos for a reasonable price in this downturn.

While opportunists wait in the wings to snap up assets for cents on the dollar, only a few would be able to buy them without Wall Street financing.

And then there's the fact that the downturn has especially hurt lower-rent casinos and slot businesses like Herbst's.

Discussion: 9 comments so far…

By stevem

12/4/08 at 6:09 p.m.

Suggest removal

"lower-rent", huh?

wow...

i guess they aren't "high-rent" like station casinos, but they don't have a huge media company constantly writing fluff pieces for them either.

don't worry, greenspun media group...your beloved green valley ranch is about to be "lower-rent" as well.

oh, how is that "atlanta peach" magazine doing? oh, ya, it got shut down a few days ago, didn't it?
By jfnance32

12/4/08 at 8:40 p.m.

Suggest removal

We need to raise taxes on them to help them out.
By tvegas

12/5/08 at 7:53 a.m.

Suggest removal

wonder if they also defaulted on the payments for their "toys"
By gqbossing

12/5/08 at 9:46 a.m.

Suggest removal

the Herbst family isn't going to be affected other than a hit to their pride and ego (even if that).

The real concern is the city of Primm, which looks to lose an aerse load of jobs more than they have with the Bullalo Bills semi closure...
By Me

12/5/08 at 10:33 a.m.

Suggest removal

There is no city of Primm.
By BorisR

12/6/08 at 5:50 a.m.

Suggest removal

Now that the big car companies will get what they have been praying for, next companies to be bailed out will be the casinos. It would surprise me if the billions to be given to GM and Co. will really invested for good and the crazy mentality of building big SUV's and trucks for single drivers will come to an end... Also, The number of casinos in L-V is too big compared to the number of potential people willing to gamble, respectively the number of people who (still) have cash to gamble. The number of tourists is shrinking at the same pace and casinos are taking off the steak-and-eggs specials by replacing their coffee shopts with Diner Restaurants. It's a shame!!!
By tvegas

12/6/08 at 9:42 a.m.

Suggest removal

Even the lenders don't want these properties back
By art

12/6/08 at 12:09 p.m.

Suggest removal

It's a real same Las Vegas is imploding ... What happen ...All the very smart people took there eye off gaming and the gaming experience and tried to sell something that was out of reach for ...Them the casino owners ...and their customers....The modern business model fails the first time there isn't a line out the door .... But hey anyone that's been around long enough could see it coming two years ago...Better LUCK next time...
By pbud33

12/6/08 at 12:39 p.m.

Suggest removal

Another company that treats their employees poorly, has poor customer service in every facet of their business, that needs to see hard times.

I did not wish or want this upon them, they brought it upon themselves.

Hopefully, they can and will learn from hard times, and respond appropriately in the future.