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Gaming Guru

Jeff Simpson

Coast Chief Rethinks Initial Stock Offering

7 January 2004

Coast Casinos may resurrect its plan to offer public shares of the company's stock, Chairman Michael Gaughan said Tuesday.

"Maybe we'll look at (an IPO) this summer and fall," Gaughan said. "Depending on the economy and the market, I might be interested."

Gaughan said in mid-2002 that plans to offer Coast stock were poorly timed and hurt by gaming stock declines and the bear market.

Coast's casinos are generating strong cash flow, and Gaughan said he does not feel any pressure to raise money.

"I'm in no hurry," Gaughan said when asked why he hasn't already decided to offer public shares in Coast Casinos, when stock prices for many Las Vegas-based casino operators are trading near all-time highs.

One analyst thought a stock offering from Coast would be well-received.

"There would definitely be great interest if Gaughan offers an IPO," Las Vegas Investment Advisors' casino analyst Dave Ehlers said. "This business speaks for itself. Real revenues. Real casinos. Superior properties with growing cash flow. How can you rate Coast anything but excellent?"

Gaughan said in 2002 that the real reason he wanted to offer public shares was to maximize the company's value in order to allow minority partners to divest some of their holdings.

"A stock offering raises the value of your company," he said then. "What I'm trying to do is take the company one notch higher."

The Orleans, Suncoast, Gold Coast and Barbary Coast are doing well, Gaughan said, and he plans to break ground in April on the $350 million South Coast, at the southwest corner of Silverado Ranch Road and Las Vegas Boulevard.

The South Coast would open in the late fall of 2005, he predicted.

A $36 million, 460-room hotel tower is being added to The Orleans, and will raise the property's room count to 1,886.

"We're selling the rooms," Gaughan said, crediting general manager and former Flamingo executive Horst Dziura with driving up the property's average daily room rate while keeping occupancy levels high.