ouch Landry's to Buy Golden Nugget Casino

[karyn]

from las vegas review journal

By ADAM GOLDMAN
Associated Press Writer

LAS VEGAS (AP) -- Landry's Restaurants Inc., whose operations include Rainforest Cafe and The Crab House, is buying the Golden Nugget hotel-casino in downtown Las Vegas, a first step in a strategy to get a slice of the lucrative gambling business and expand its profit pipeline. Landry's shares surged more than 12 percent on the news.

Houston-based Landry's announced Friday it struck a deal with Poster Financial Group Inc., owners of the Golden Nugget, under which it would pay $140 million in cash and assume $155 million in debt for the Golden Nugget.

The Golden Nugget Las Vegas is considered the jewel of a faded downtown with 1,907 hotel rooms and 2,800 employees. Built in 1946, it's the largest of the 14 hotel-casinos in the downtown area.

Landry's owns and operates more than 300 restaurants, and the brands also include Landry's Seafood House, Joe's Crab Shack, Willie G's Seafood & Steakhouse and The Chart House. It employs more than 30,000 people and had more than $1.1 billion in revenue in 2003.

"The Golden Nugget is the premier property in downtown Las Vegas, has outstanding brand recognition across the country, and is a perfect fit for us," Landry's chairman and president, Tilman Fertitta, said in a statement.

"Landry's operating skill and steady leadership will help boost the Golden Nugget to a new level of performance and satisfaction."

Its shares rose $3.54, or 12.5 percent, to close at $31.95 in Friday trading on the New York Stock Exchange. Its shares are up from a 52-week low of $24.75 in late October.

This is the company's first foray in the casino business and a short-lived one for the current owners of the storied property that was once owned by developer Steve Wynn.

Poster Financial Group is owned by Timothy Poster and Thomas Breitling, the founders of travel Web site Travelscape.com, which was later sold to Expedia.

Poster and Breitling bought Golden Nugget properties in downtown Las Vegas and Laughlin in June 2003 for $215 million from MGM Mirage Inc. They later sold the Laughlin property to Barrick Gaming Corp. for $31 million.

Last year, the downtown property suffered from poor cash flow, a measure of a casino's profitability.

Gambling analysts said it had been underperforming because the pair had embarked on a risky strategy of luring high rollers who could expose the casino to serious losses.

Analysts said the bet didn't pay off and the casino's bottom-line took a big hit.

"We would not consider the poor operational performance of Golden Nugget under Poster Financial as the basis for Landry's valuation," said John Mulkey, a Bear Stearns Co. gambling analyst in New York. "We believe this acquisition would be a very favorable outcome for Poster and its bondholders."

Fertitta called it unlikely that Landry's would cater to high-rollers unless enough would play so that averages could work in the casino's favor. "Our philosophy will be a little bit different," he told The Associated Press.

Fertitta said he'd like to expand the property; said Landry's was happy with management currently in place; and said he thought the Golden Nugget could generate cash flow of $40 million a year.

Poster and Breitling also decided to take part in the Fox reality television show, "The Casino." Created by Mark Burnett, the program turned out to be a bust and portrayed the casino in an unflattering light. The show was not renewed.

Now the two are getting out at a time when casinos are being valued at record amounts.

"This sale is designed to capitalize on the tremendous demand for casino properties in Las Vegas and to enhance the ability of our company to participate in various business opportunities," Poster said in a news release.

Tilman Fertitta is the cousin of Frank and Lorenzo Fertitta of Station Casinos Inc. in Las Vegas. Before taking control of the casino, Tilman Fertitta will have to get approval from Nevada gambling regulators.

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On the Net:

Landry's Restaurants: http://www.landrysseafood.com/

Golden Nugget: http://www.goldennugget.com/

[CPRB]

that was very interesting....I don't really follow waht is going on in Las Vegas....living up here in the White North. I have read that alot of Millionairs are investing in The city and trying to capitalize on places that aren't doing well and turning em to a family oreinted hotesl and resorts....I would love to go one day to Las Vegas...anyhow cool insight