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.