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Howard Stutz

Herbst Gaming to Buy Sands Regent

18 May 2006

Las Vegas-based Herbst Gaming pushed into Northern Nevada's casino market Wednesday, agreeing to a $148 million purchase of Sands Regent, which operates four casinos including the Sands Regency in Reno.

The transaction, in which privately held Herbst Gaming would buy the outstanding shares of publicly-traded Sands Regent for $15 a share, is subject to approval by gaming regulators and Sands Regent stockholders. The company hopes to close the purchase by year's end. The deal would give Herbst Gaming control of 12 casinos in Nevada, Missouri and Iowa. Herbst Gaming now operates eight casinos, including the off-Strip Terrible's Casino on East Flamingo Road, two casinos in Pahrump, one in Henderson and one in Searchlight. Herbst Gaming is also one of the state's largest slot machine-route operators with more than 8,400 games in noncasino locations such as grocery stores, drugstores, convenience stores, bars and restaurants. Herbst Gaming General Counsel Sean Higgins said the slot-route operation has included locations throughout Northern Nevada for several years. "This transaction will enable Herbst to further broaden and diversify its geographic presence within the state of Nevada and its cash flows as well as create cross-marketing and other growth opportunities." Herbst Gaming Chairman Edward Herbst said in a statement. Once the deal closes, the four Sands Regent casinos -- Sands Regency, Gold Ranch in Verdi, Rail City in Sparks and Depot in Dayton -- would be operated as a Herbst Gaming subsidiary. The current Sands Regent management is expected to remain with Herbst and manage the properties. "We believe this transaction delivers excellent value to our shareholders and creates increased opportunities for growth and development for our employees, who will benefit from being part of a larger and more diversified gaming company," Sands Regent President Ferenc Szony said. The news sent shares of Sands Regent up 6.34 percent in trading on the Nasdaq National Market Wednesday. The company's stock price closed at $14.70, up 88 cents. Herbst Gaming, which has public debt, began in 1987 as an offshoot of the family business, Terrible Herbst Oil Co., which operates more than 80 all-inclusive service stations in Nevada, California and Arizona. The stations offer gasoline pumps, convenience stores, oil and lube services and car washes. The gaming operations have grown steadily over the past few years, beginning with maintaining and repairing the slot machines in the Terrible Herbst stores. In February 2005, the company bought a Midwest casino operator, which included the St. Jo Frontier in St. Joseph, Mo., Mark Twain Casino in LaGrange, Mo., and the Lakeside Casino in Osceola, Iowa. Terrible's Casino in Las Vegas is undergoing a renovation that will expand the casino and add a second hotel tower and a parking garage.