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Best of Howard Stutz

Gaming Guru

Howard Stutz

Golden Nugget Owners Discuss Plans

9 September 2005

LAS VEGAS -- Landry's Restaurants Chairman Tilman Fertitta on Thursday spelled out ambitious redevelopment plans for the Golden Nugget casinos in Las Vegas and Laughlin, including asking the city to vacate a street for the potential addition of a third hotel tower to the downtown property.

During an animated presentation to the state Gaming Control Board, which gave unanimous preliminary approval to the Houston-based company's $326 million purchase of the two Golden Nugget casinos, Fertitta said Landry's, which operates more than 300 restaurants in 36 states, sees expansion opportunities.

"Every business we've acquired, we've grown it substantially, and we see no reason why we can't do the same with the Golden Nugget," said Fertitta, whose company has 28 different restaurant brands along with a nongaming hotel division. "We're hoping to take the Golden Nugget brand into other markets."

Fertitta said Landry's is developing a redevelopment plan for the 1,900-room downtown casino, which, in addition to a new hotel tower, would include reconfiguring the older casino while building additional casino space. Fertitta said Landry's will probably add a 1,200-seat theater, redevelop the pool area and add convention space.

But the only renovation that would take place immediately when Landry's takes over the Golden Nugget from the Poster Financial Group is the addition of two of the company's signature restaurants, Grotto and Vic & Anthony's.

While Fertitta showed the three control board members artist renderings of the Golden Nugget with a third hotel tower and other enhancements, he said after the 1 1/2-hour hearing that other than the restaurants, development was still being planned.

He said the company has yet to approach Las Vegas city officials about vacating a street -- possibly portions of Carson Avenue or First Street -- to allow for a new hotel tower.

"We haven't set a budget and it's all conceptual," Fertitta said, adding the company is exploring purchasing some land near the casino. "As soon as we get there, we'll lay it all out for everyone to see."

Fertitta said Landry's also plans to build a second hotel tower to the 300-room Golden Nugget Laughlin, while adding two of the company's restaurant brands, Joe's Crab Shack and Saltgrass.

Gaming Control Board Chairman Dennis Neilander said the company had listed an amount for capital expenditures in its application, but he didn't divulge any figures.

Landry's announced in January it was buying the Golden Nugget from Poster Financial for $295 million in cash and debt assumptions. In June, when Barrick Gaming failed to complete a $31 million purchase of the Golden Nugget Laughlin, Landry's picked up the property for no additional charge. Originally, Barrick's payment would have gone directly toward debt reduction. The restaurant company was not required to come up with additional funds but the overall value of the purchase increased.

Landry's went public in 1993 and Fertitta told the control board the company has had only two quarters where it didn't hit its earnings per share estimates. The company has annual revenue of $1.2 billion, $1 billion in assets and $160 million in annual cash flow.

In trading Thursday on the New York Stock Exchange, Landry's closed at $29.30, down 54 cents or 1.81 percent.

Fertitta, a cousin of the Fertitta family that founded Station Casinos, said he wants to see the Golden Nugget's customer base shift from the high-end play favored by Poster Financial to high-volume slot machine players.

"We're going to be doing lots of things for (slot players) because that's our core business and it's who we want to take care of," Fertitta said.

Control board members voiced their support for the change in direction, telling the Landry's representatives the casino hadn't been profitable.

"When I would go over to the Golden Nugget, employees would express their concern with the casino's direction," control board member Bobby Siller said.

Neilander said he was curious to see how Landry's would market the casino to its restaurant customers, estimated at more than 50 million by Fertitta.

"(Landry's) is a very solid publicly traded company and I have no regulatory concerns," Neilander said.

Because Fertitta owns a small percentage of the Houston Texans of the NFL, the control board required that the two Golden Nugget casino sports books not accept wagers on games involving the team.

The Nevada Gaming Commission will make a final ruling Sept. 27 on the matter.

In action involving a second downtown casino, the control board approved the Henry Brent Co. to take over ownership of the Lady Luck.

The company, which also owns seven Timbers taverns in the Las Vegas Valley, has been operating the Lady Luck since August 2003.

Andrew Donner, whose Donner Investment Trust owns 70 percent of Henry Brent, told the control board plans are being made to redevelop the Lady Luck, which has 743 hotel rooms and a 38,000-square-foot casino.

Also, the control board granted preliminary licensing approval for several members of the Aladdin management team, including Chairman Robert Earl and general manager Michael Mecca. The company that operates the Aladdin, Opbiz, said it was progressing toward transforming the Aladdin into a Planet Hollywood-themed hotel-casino.