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LAS VEGAS, Nevada -- The future of Las Vegas-based Ameristar Casinos became clouded Monday following the weekend death of company founder, chairman and majority stockholder Craig Neilsen.
Neilsen, 65, died Sunday in his sleep at his Las Vegas home.
The casino company's board of directors quickly implemented a management succession plan in an emergency meeting Sunday. Neilsen's son, Ray Neilsen, and longtime Ameristar executive Gordon Kanofsky were named co-chairmen. Former Harrah's Entertainment executive John Boushy, who joined Ameristar in August as president, was named chief executive officer.
In a statement, the company tried to alleviate any concerns of investors, saying senior management "expects the transition to be orderly and without any changes in (Ameristar's) key philosophies and strategies."
Gaming analysts pondered the future of the regional casino operator, which has seven properties in Northern Nevada, Missouri, Mississippi, Iowa and Colorado. Neilsen, who was left as a quadriplegic by an automobile accident in 1985, took the company public in 1993 and was Ameristar's largest shareholder with more than 31.1 million shares, which is roughly 55 percent.
Some speculated Ameristar could become a takeover target.
"Given the passing of Mr. Neilsen, investors will likely focus on the future of the company and the potential for Ameristar to continue on its own, go private, or seek a sale," Morgan Joseph gaming analyst Adam Steinberg said in a note to investors. "While we believe the company will eventually be sold to either a strategic acquirer or private equity, we caution investors against unrealistic expectations about a quick and immediate sale of the company."
Shares of Ameristar shot up more than 18 percent in trading on the Nasdaq National Market on news of Neilsen's death, with investors speculating on a possible sale. By the end of the trading day, shares of Ameristar settled back to close at $28.54, up $2.86, or 11.14 percent. More than 3.2 million shares were traded, almost 15 times the average daily volume.
Company officials told gaming analysts Monday that operations would continue unabated. Expansion projects totaling almost $600 million in hotel, casino and nongaming amenities at three Ameristar casinos were expected to proceed. The projects are a $260 million expansion at Ameristar Black Hawk near Denver, $240 million in renovations to Ameristar St. Charles near St. Louis and a $90 million enhancement of Ameristar Vicksburg in Mississippi.
"Management indicated that they not only have no desire to liquidate or sell the company, but that the company will continue to be operated as it has in the past and will even continue to look for investment opportunities going forward," Jefferies & Co. gaming analyst Larry Klatzkin said in a note to investors.
"Given that the stock is tied up in legal issues and management has indicated it is not looking to liquidate or sell the company, the current short-term rise in the stock based on such speculation is unfounded."
According to his estate planning, Neilsen's stock holdings were to be transferred to his private foundation, which is focused on spinal cord injury research and treatment. Neilsen had recently been honored by the nationally known Buoniconti Fund to Cure Paralysis.
In a statement, Ameristar said Neilsen's desire was for his foundation to retain a controlling interest in Ameristar.
"Craig was very well-prepared in all of his business transactions, and this is no exception," said Kanofsky, who is Ameristar's executive vice president. "He thoughtfully laid the foundation for the future ownership and management of the company."
Neilsen, who was born in Utah, was an attorney and one of the largest real estate developers in Southern Idaho, where his company was responsible for many of the major buildings in Twin Falls.
Neilsen became interested in gaming when his father owned small percentages of the Cactus Pete's and Horseshu casinos in Jackpot near the Nevada-Idaho border. Neilsen inherited the ownership stake in 1971 and he assumed full ownership of both casinos in 1987. He began exploring other gaming investments.
Ameristar went public in 1993 after Cactus Pete's was expanded. The company built and opened the Reserve in Henderson, eventually selling the property to Station Casinos in exchange for the company's two Missouri riverboat casinos in Kansas City and St. Charles.
Ray Neilsen, who has been Ameristar's vice president of operations and served as general manager of Ameristar Vicksburg, said his father had a tremendous passion to expand and build Ameristar.
"(My father) inspired all of us with the courage, determination and dignity that he demonstrated every day in living with a spinal cord injury," Ray Neilsen said. "He has left a lasting impact on the lives of so many others through his generosity and community spirit."
In 2002, the American Gaming Association honored Craig Neilsen as "Best Performing CEO." In 2005, he was inducted into the American Gaming Association's Gaming Hall of Fame.
Neilsen is survived by his son, Ray, and stepdaughters Jaime and Amanda. Services are pending.
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