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Gaming Guru

Jeff Simpson
 

Golden Nugget Bid Extension Expected

21 January 2004

Wall Street worry about one-year limitations on gaming licenses for the prospective owners of the Golden Nugget is expected to prompt the buyers' lawyers to ask the Nevada Gaming Commission on Thursday to extend the limitations to four years, industry insiders said.

Moody's last week downgraded its outlook on the $155 million in secured notes that the prospective owners of the Golden Nugget have agreed to sell to partially fund their $215 million purchase of the downtown landmark and its Laughlin sister property.

The downgrade was blamed on uncertainty about the effect of a recommendation for a one-year limitation on licenses for the prospective buyers that the Nevada Gaming Control Board made on Jan. 7.

Lawyers for prospective Golden Nugget owners Tim Poster and Tom Breitling are expected to ask the Nevada Gaming Commission on Thursday to change the recommendation and extend the duo's license limitation to four years.

The control board recommended limiting the license to one year after panel members said they were concerned about the pair's relationship to Crazy Horse Too strip club owner Rick Rizzolo, the subject of a continuing FBI investigation.

The limitation would require the Golden Nugget buyers to appear before regulators one year from now to prove they're worthy of keeping a gaming license.

The commission has the power to eliminate the limitation altogether. But Poster and Breitling's lawyers are expected to ask the panel to limit the license to four years with the owners having the option to ask for the limitation's removal after one year, insiders said.

"Moody's interpreted the limitation as a one-year license," the source said, noting that with a four-year limitation Nevada regulators would maintain the leverage they had over Breitling and Poster for at least as long as the initially approved one-year limitation.

Poster Financial lawyer Frank Schreck said Tuesday that he will probably ask the commission to extend the limitation, which would only apply to Poster and Breitling personally, and not to the Poster Financial Group corporate entity.

At the control board's Jan. 7 meeting, when it became clear the three-member panel wouldn't recommend Poster and Breitling's licenses without a limitation, Schreck asked for a shorter limitation, guessing that Wall Street would prefer it to a longer period of flux.

But Schreck said he changed his mind after the Moody's debt outlook downgrade.

Control board Chairman Dennis Neilander said the panel usually recommends license limitations for two years or more, and said if Poster Financial asks for a longer limitation, he'd be inclined to recommend approval.

"That was the direction we were heading (at the Jan. 7 meeting) when they asked for a one-year limitation," Neilander said. "I personally wouldn't object to their extending the limitation if they request it."

Fellow panel member Scott Scherer, who said during the control board meeting that he'd vote "no" on Poster's and Breitling's license recommendation unless a limitation was added, likewise wouldn't object to a longer limitation on their licenses.

"I want there to be a conclusion of the FBI's investigation of Rick Rizzolo (before Poster and Breitling's limitation ends)," Scherer said.

Both Golden Nugget properties are expected to change hands at the end of the day on Thursday if the commission approves the sale, as expected.