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Debt-strapped Herbst Gaming shuts small Northern Nevada casino19 June 2008
By Howard Stutz
NEVADA -- Financially troubled Herbst Gaming closed one of its small Northern Nevada casinos this week.
The Las Vegas-based company, which told investors in late March it was facing possible bankruptcy over a mounting debt load, closed the Red Hawk Sports Bar in Dayton, laying off an undetermined number of workers. The small casino, which had 33 slot machines, was purchased by Herbst in January 2007 through its $119 million acquisition of Sands Regent, a Reno-area casino operator.
Herbst officials could not be reached for comment Wednesday.
The company operates 15 casinos in Southern and Northern Nevada, including the three Primm resorts along Interstate 15 at the California-Nevada border, 35 miles south of Las Vegas, and the off-Strip Terrible's on East Flamingo Road. The company also owns three casinos in Missouri and Iowa and operates approximately 7,200 slot machines through its Nevada route operation.
A gaming source said Herbst had filed a notice of temporary closure of the Red Hawk with Nevada gaming regulators earlier this month.
Herbst Gaming said it might have to seek bankruptcy protection unless it can reorganize a payment structure for its more than $1.146 billion debt. Auditors said the company's troubles meeting its bond payments triggered a potential default under its credit agreement.
Herbst said its Southern Nevada operations have been hurt by failing economic conditions, a statewide ban on smoking in taverns and restaurants, and competition from American Indian casinos in Southern California.
In May, family-controlled Herbst Gaming shook up its management structure, replacing Chairman and Chief Executive Officer Ed Herbst with his two brothers. Tim Herbst was named chairman of the board while Troy Herbst was named CEO. Ed Herbst remained as a company director, but is on a leave of absence from his officer duties due to personal reasons.
The company is privately held by the three brothers but has publicly owned debt.
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