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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Progessive Gaming misses debt deadline

16 January 2009

LAS VEGAS, Nevada -- Troubled technology provider Progressive Gaming International Corp. is headed toward extinction.

A foreclosure sale of the company's assets was rescheduled for today, according to a company spokesman. Las Vegas-based Progressive Gaming did not meet a Thursday deadline to pay $17 million in obligations to one of its lenders.

Sources said that a "major slot machine manufacturer" was attempting to acquire Progressive Gaming's more valuable assets, including patents for gaming systems technology and radio frequency identification technology, commonly referred to as RFID.

Ed Rogich, a spokesman for Reno-based slot machine giant International Game Technology, which loaned Progressive Gaming $15 million last August through a convertible note and had other technology-related joint ventures with the company, said he couldn't comment.

The majority of Progressive Gaming's upper management left in the past few months, including longtime CEO Russel McMeekin in September and CFO Heather Rollo, who resigned earlier this month to take a job with Ameristar Casinos. A telephone recording Thursday at the company's corporate headquarters on Pilot Road stated the office was closed.

Sources said employees in several of Progressive Gaming's divisions were laid off this week. In an interview in April, Rollo said the company employed about 300 people and managed more than 75,000 slot machines worldwide. She said the company had a goal of becoming a gaming industry leader with its software systems and intellectual property.

According to its Web site, Progressive Gaming had American offices in Las Vegas; Sparks; Biloxi, Miss.; Kansas City, Mo.; New Jersey; and a research and development office in Carlsbad, Calif. Progressive operated international offices in Calgary, Alberta; The Netherlands; Australia; Estonia; England; and Macau.

Bob Parente, an executive vice president with Progressive Gaming since July 1996 who was still at the company's headquarters Thursday, said via e-mail he couldn't comment.

Gaming Control Board Chairman Dennis Neilander said the agency was aware that Progressive Gaming was heading toward a foreclosure sale. He said the company did not owe any outstanding obligations to casino patrons.

In a Christmas Eve filing with the Securities and Exchange Commission, Progressive Gaming said it was cooperating with its senior secured lender, Private Equity Management Group Financial Corp., to conduct a sale of all of the company's assets to the highest qualified bidder.

A representative from Private Equity Management, which is based in Irvine, Calif., did not return phone calls.

In August, IGT and Progressive announced the $15 million infusion from IGT could be converted into an ownership stake of 22.5 percent.

On Wednesday, an attorney for Hasbro Inc. filed an affidavit with the U.S. District Court in Las Vegas, seeking payment from Progressive Gaming of $1.7 million plus interest stemming from a lawsuit the toymaker settled with the company in October 2007. The case took place in Rhode Island federal court and involved the use of one of Hasbro's products on a slot machine. Progressive paid $1 million of the agreed-upon $2.7 million settlement. Hasbro is seeking payment of the remainder of the settlement.

Progressive Gaming was formed in 1986 as the Mikohn Gaming Corp.

Despite the sales of its slot machine and table game businesses and the transition into a pure gaming technology company, Progressive Gaming never recovered from its financial meltdown in 2007. Its stock price fell almost 75 percent and wiped out some $200 million in market capitalization.

Also in 2007, Progressive Gaming paid $20 million to a table game developer to settle a federal antitrust lawsuit.

In September, Progressive Gaming executives told investors it would miss its 2008 projections. In October, the company was delisted by the Nasdaq National Market.