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Chris Jones

Ameristar Casinos Vows to Seek New Opportunities

5 May 2006

LAS VEGAS -- One day after it abandoned its quest to buy the Tropicana, Ameristar Casinos on Thursday promised to aggressively pursue new opportunities in Southern Nevada and beyond.

"We're excited about what's happening in Las Vegas," Craig Neilsen, Ameristar's chairman and chief executive officer said during a first quarter earnings call.

"We're just looking for an opportunity that fits our modus operandi," he added.

Until Wednesday, the Las Vegas-based company with no Las Vegas Valley casinos was engaged in a bidding war for Aztar Corp., the Phoenix-based parent of the Tropicana.

Other suitors include Las Vegas' Pinnacle Entertainment; Los Angeles-based Colony Capital, which owns the Las Vegas Hilton; and Fort Mitchell, Ky.-based Columbia Sussex Corp., owner of the off-Strip Westin.

On Wednesday, however, Ameristar withdrew its interest in Aztar.

"We thought that bidding beyond the $47 (per share) value was not in the best long-term interests of our shareholders," Neilsen said.

Jefferies & Co. analyst Larry Klatzkin praised Ameristar for its "self-control in not paying $50 to $52" for Aztar.

Columbia Sussex is offering $50 in cash for each share of Aztar stock, while Pinnacle's offer totals $48 per share in combined cash and stock.

Pinnacle executives this week toured the Sahara, which could provide an alternative Strip site should Aztar's price climb too high.

Ameristar's corporate headquarters are in Hughes Center, but it has not owned a Southern Nevada casino since it sold Henderson's The Reserve to Station Casinos five years ago. It operates seven casinos in Colorado, Iowa, Mississippi, Missouri and Jackpot, a small northeast Nevada town near the Idaho state line.

Regardless of its latest Las Vegas withdrawal, Ameristar is strengthening its core market.

On Thursday, the company announced a $240 million addition to its Casino St. Charles, a riverside resort complex near St. Louis.

Plans call for a 25-story, 400-room hotel; expanded parking garage; and conference center to bolster a 3,300-slot casino that already draws 10 million visitors per year.

Ameristar also reported record net revenue of $256.1 million in the three months ended March 31. That's $16 million, or 6.7 percent, better than last year's first quarter.

Quarterly income was $2.6 million, or 5 cents per share, an 86 percent drop from last year's earnings of $19.2 million, or 34 cents per share. In February, Ameristar recorded a one-time loss of $17.1 million when it prematurely paid off a note worth $380 million, the company said.

On an adjusted basis excluding the loss, Ameristar's earnings per share was 35 cents, which missed analysts' expectations by 2 cents, according to Thomson First Call.

Operating cash flow, a key performance indicator defined as earnings before interest, taxes, depreciation and amortization, was $66.2 million, down 1.3 percent from last year's $67.1 million.