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StumbleCannery casinos weigh on company’s earnings
Taking over the site of the old Nevada Palace, Eastside Cannery Hotel and Casino is the first new major Boulder Highway casino to open in more than a decade. A $250 million project, the casino has 307 rooms, six restaurants, four bars and a lounge.
Thursday, Aug. 27, 2009 | 9:52 a.m.
Australia's Crown Ltd. posted further losses Thursday because of its U.S. gaming investments, this time writing off most of the value of its interest in Cannery Casino Resorts LLC of Las Vegas.
Crown reported a loss for the year ended in June of $1.197 billion (Australian) vs. a profit one year earlier of A$3.546 billion. In the six months ended in June it lost A$788 million (U.S. $651 million.)
Before today's report, Crown had written off A$454.9 million in investments in the Fontainebleau resort development project in Las Vegas, Station Casinos Inc. and Harrah's Entertainment Inc.
Today, Crown said it took a loss of A$378.2 million to write down the value of its investment in Cannery, reducing the value of its stake in Cannery to A$49.6 million.
A $1.8 billion deal for Crown to acquire Cannery was canceled in March, and instead Crown paid Cannery a U.S. $50 million break-up fee and U.S. $320 million for a preferred instrument that can be converted to an equity stake of 24.5 percent in the company.
"The asset write-down has been precipitated by the effect that current economic conditions in the United States have had on Cannery’s business. Crown considers it is likely that Cannery’s Las Vegas casinos will be affected by the U.S. recession for some time," Crown said in a statement. "In addition, the original projections for the new permanent Meadows Casino in Pittsburgh have been adversely impacted by the onset of the U.S. recession."
Besides its Pittsburgh casino, Cannery has two casinos by that name in the Las Vegas market and also operates the Rampart casino at the JW Marriott Resort in Summerlin.
As for Fontainebleau, Station and Harrah's, Crown said it took additional write downs in those investments and wrote off a $31.3 million loan to Fontainebleau.
The full-year write-down for those investments totaled A$592.8 million, which includes the previously reported $454.9 million write-down.
"The global financial crisis has had a major adverse impact on the North American casino industry, leading to a requirement to write down the carrying value of Crown’s investments in these markets. In this context, Crown’s investments in North America were ill-timed," Crown Chief Executive Officer Rowen Craigie said in a statement.
The company said the outlook for its Australian casinos, Crown Melbourne and Burswood, is positive and that it's excited about its investments in Macau.
Privately-held Cannery doesn't publicly report its financial results and the company had no immediate comment on today's write-down by Crown.
Debt rating agency Standard & Poor's earlier this month lowered its rating on Cannery to B from B+ with a negative outlook for some $860 million in debt, saying "Cannery is experiencing weak operating performance at its Las Vegas properties and a slower-than-expected ramp-up at its Pennsylvania property."
Companies in the B class under Standard & Poor's definitions face uncertainties and exposure to adverse business conditions, but currently have the capacity to meet financial commitments.
Xavier Walsh
Separately, Cannery on Wednesday named Xavier Walsh as chief operating officer. Walsh, will oversee the four Cannery properties, working directly with the general manager at each casino.
"Xavier Walsh has the experience and expertise that will make him an excellent fit for the Cannery Casino Resorts family," Bill Paulos, Cannery co-founder and co-principal, said in a statement. "We are very pleased he has joined our team and look forward to his growth and success within our company."
Walsh began his gaming career at the Australian gaming company, Tabcorp Holdings Limited. After holding positions in both its corporate and gaming divisions, Walsh was appointed to Chief Financial Officer at the company’s Star City Casino in Sydney, Australia. The company later acquired the Queensland-based casino company, Jupiter’s Limited and Walsh was named General Manager of the Brisbane casino, Conrad Treasury. Walsh was later appointed Managing Director of the company’s three Queensland casino properties before relocating back to Sydney to take up a divisional role as executive director of strategy and commercial development. Prior to joining Cannery Casino Resorts, Walsh worked with Crown Ltd.
Tom Lettero
In announcing the hiring of Walsh one year ago, Crown said the plan at the time was for him to become chief financial officer of Cannery as part of the planned acquisition.
Also at Cannery, Tom Lettero was named president and chief financial officer.
"Tom Lettero has been a key player throughout his tenure with Cannery Casino Resorts and has played a crucial role in the growth and expansion of the company," Bill Wortman, co-founder and co-principal of Cannery Casino Resorts, said in the statement. "We look forward to his continued success at Cannery Casino Resorts."
Lettero joined Cannery Casino Resorts in 2005 as chief financial officer and was later appointed to chief operating officer in January 2008. Prior to joining Cannery, Lettero served as senior vice president and chief financial officer at Aladdin Gaming LLC and as executive vice president and chief financial officer at the Stratosphere Corp. He has also held senior management positions at Palace Casinos Inc. in Biloxi, Miss.; H.P. Casino Management in Golden, Colo.; as well as MGM Grand Hotel & Casino, Main Street Station, Mirage Resorts, Sands Hotel and Casino and Caesars Palace.
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You might as well forget going to their casinos. Their slots were tight before I can just imagine now. if they gave the customer just a break u would see more activity!
Yep its no fun when you put in a twenty and dont win anything at all to keep you playing. Its gone in 8 spins or less. I mean for $20 let me play for a bit.
I can't believe this Australian gaming giant wanted to invest in the Cannery in the first place. What were they thinking?
It's an ugly building with cheap neon lights on the outside. Why would I ever want to enter such a boring building? They bragged about how little money they spent to build it. It shows.
Never won at the Craig rd location; Rampart is a different story; have won there many times. $20 goes a longway there
where does 20 get you furthest on a slot? gold coast has been good to me........
These days, those "so called" penny slots are really $5 slots!!!! Must put 500 pennies in to win prize, so many idiots out there that really don't understand this.
People would come in if they brought back the true penny slots. 3 lines
x 1 cents = 3 cents a spin. Casinos would be making thousands of pennies per day if they took my great advise. And people like me from new mexico could play our $20 bill for at least 9-12 hours before busting out. :(
Boomer
not true. You don't have to play max coins to win, but always max lines. I've won up to $300 on amachine by playing max lines and 3 credits per line for a total bet of 60 cents with a $40 investment. of course max coins will win you more, but walkin with anything over $150 on 20 bucks is good too.......
ps yes, thepeople who do play max at $3.00-5.00 penny machines are better off going to either quarter machines or dollars. Yes those are the stupid ones since odds are better at those bets at a higher denominaton machine
Kerry Packer-The Crown genius. More money than God. It was easy for him-brilliant. And generous. His son and daughter-they fell far from the apple tree, and have wasted billions. Lesson-don't leave controlling power in the hands of your kids when you croak-leave it in the hands of a trustee, who is actually a drinking buddy, and let him determine how much the Packer offspring should control. Really a sad story. Apologies, Kerry, we really miss you...
customers of the Rampart are fed up with the tight gaming machines. Management is aware and continues to run off the very people who can save them and that is the customer.
i like the East Side Cannery. The rooms are great and the deals good. I also miss a bit the loose machines but some of them can be found. Also, I like the bank of "coin-only" 6-9-J-O-B machines. They are the attraction of the casino. People believe that they have bigger chances of winning, but don't know that the only reason that they lose less is because they get smaller pace of their game due to continuous filling of the coins. Anyway, it's a fun place and I don't think it's all that negative. There are many hotels in Vegas that are much worse than The East Side Cannery. I am not 100 per cent with all the complaints of the readers. And i will check in again over there next time when I goto Vegas.
From Switzerland
I won $40 off $2 on video poker there last weekend. Slots are for suckers anyways.
The buffet is nothing special, but it's got great advantages: No waiting at all at most times, and price/value ain't too bad, either. I paid with the points I received for playing on the progressive double double bonus bank just in front of the poker room. for the first time in my life I hit 2 Royals within 3 days, actually, it's the first time I hit 2 Royals on a progressive machine on the very same trip,, within 72 hours period! 4 Aces with kicker just wouldn't show so the people kept playing although it's just a 4-5-9 version.
The poker room is nothing. I think they're better off shutting it down but offering 2-4 limit games with highway robbery rake. It's just not fair to collect so much without giving the player a decent chance to win something. The limit needs to be raised to 3-6 or 1-4-8-8 as otherweise it's pointless playing there.
I repeat: I like the East Side Cannery. I think they've got the best rooms at value you can find in Vegas.
From Switzerland
oh, I forgot: I think it's also the only hotel in town that's filling the rooms at the 13th floor first before giving out other rooms :))))
I think there aren't too many hotels in Vegas that have 13th floor. I like this idea, it was a very special experience for me. And it keeps me coming back. It's nice to park your car directly in front of the hotel without the long walking distance. Sam's Town Parking is already a bit of a hassle compared. You see, East Side managers knew what they were doing when they built the property :)
From Switzerland
Boris I enjoy your enthusiasm. Lets see how you feel after a couple of more visits.
maybe by then the M has its ridiculous resort amenity fee cancelled, as well as Station Casinos. From this point of view the East Side Cannery is one of the top picks. They don't charge this ridiculous extra here and there that you don't actually need or want. South Point is also adding something and SunCoast does it, too, but in a way that's still ok for me. However, Station Casinos with its ridiculous 12 dollar (Boulder, Sunset,etc) added-fee plus 25 dollars for the Red Rock or Aliante, they must really think we'are all idiots to pay that fee. I will refuse to stay at any Station property until this madness is over. East Side Cannery has a great value and no casino in this world guarantees winning. They would not be in business if they would. Therefore, from the neutral point of view, the East Side Cannery casino is a good pick for the low budget traveller.
From Switzerland
Most of Crown's investment's baffled me. I don't get it at all, and it now appears neither did they!