Mesquite casino cites economy in reduction
<!-- end story-header -->By <CITE>Liz Benston</CITE>
Published Tue, Dec 2, 2008 (4:08 p.m.)
Updated Tue, Dec 2, 2008 (8:31 p.m.)
Black Gaming is temporarily closing its Oasis casino in Mesquite in a last-ditch attempt to cut costs and fend off a potential bankruptcy.
The Oasis' hotel rooms, RV park, golf course, gun club and time share facilities will remain open as will the company's other two Mesquite hotel-casinos, the CasaBlanca Resort and Casino and the Virgin River Hotel and Casino.
The company has been bleeding cash over the past year, reporting a loss of $34.4 million for the nine months ended Sept. 30 compared with a $12.1 million loss for the same period a year ago.
Black Gaming recently defaulted on a bank loan because its cash flow fell below lender requirements. The company is operating under an agreement that will give the company more time to boost its cash flow before the bank can collect on its debt.
While closing a casino seems counter-intuitive in a business where gambling floors remain primary revenue generators, Chief Executive Randy Black Sr. said the business is so slow that it doesn't justify operating costs.
The company's casino floors cost more to operate than the hotel rooms.
Casino revenue fell 28 percent while casino expenses fell 20 percent in the third quarter from a year ago. Hotel revenue declined 9 percent while hotel expenses increased 10 percent over the same period.
Black said the decision to close the casino and lay off some 500 of the company's 2,000 employees made "only after significant consideration and implementation of other steps to increase revenues and reduce operating costs" and was essential to preserving jobs for the majority who remain.
Fourth quarter results through November have been below expectations, with a similar outlook for December, he said.
With more than $200 million in total debts, Black's company has enough cash to run the casinos and make interest payments through the end of the year but will need more cash to keep the business going next year. Black is exploring a sale of his casinos or otherwise restructuring his company.
<!-- end story-header -->By <CITE>Liz Benston</CITE>
Published Tue, Dec 2, 2008 (4:08 p.m.)
Updated Tue, Dec 2, 2008 (8:31 p.m.)
Black Gaming is temporarily closing its Oasis casino in Mesquite in a last-ditch attempt to cut costs and fend off a potential bankruptcy.
The Oasis' hotel rooms, RV park, golf course, gun club and time share facilities will remain open as will the company's other two Mesquite hotel-casinos, the CasaBlanca Resort and Casino and the Virgin River Hotel and Casino.
The company has been bleeding cash over the past year, reporting a loss of $34.4 million for the nine months ended Sept. 30 compared with a $12.1 million loss for the same period a year ago.
Black Gaming recently defaulted on a bank loan because its cash flow fell below lender requirements. The company is operating under an agreement that will give the company more time to boost its cash flow before the bank can collect on its debt.
While closing a casino seems counter-intuitive in a business where gambling floors remain primary revenue generators, Chief Executive Randy Black Sr. said the business is so slow that it doesn't justify operating costs.
The company's casino floors cost more to operate than the hotel rooms.
Casino revenue fell 28 percent while casino expenses fell 20 percent in the third quarter from a year ago. Hotel revenue declined 9 percent while hotel expenses increased 10 percent over the same period.
Black said the decision to close the casino and lay off some 500 of the company's 2,000 employees made "only after significant consideration and implementation of other steps to increase revenues and reduce operating costs" and was essential to preserving jobs for the majority who remain.
Fourth quarter results through November have been below expectations, with a similar outlook for December, he said.
With more than $200 million in total debts, Black's company has enough cash to run the casinos and make interest payments through the end of the year but will need more cash to keep the business going next year. Black is exploring a sale of his casinos or otherwise restructuring his company.
