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Bankrupt Herbst Gaming reduces staff

10 November 2009

LAS VEGAS, Nevada -- Bankrupt Herbst Gaming has laid off workers throughout the company, the local gaming company confirmed Monday.

The layoffs are coming less than two weeks after a Reno bankruptcy court judge approved a plan that will hand the company to its secured lenders sometime next year.

"We had some layoffs all over the company based on the economy," company general counsel Sean Higgins said, adding that the layoffs account for less than 5 percent of Herbst Gaming's work force.

"At this time we find ourselves in a position where it is necessary to conduct staff reductions to further reduce expenses," Higgins said. "While these reductions are unfortunate, Herbst Gaming believes they are necessary to compete effectively."

An employee at one of the company's properties in Primm said 200 workers were laid off over the weekend in the California border town.

When it filed for Chapter 11 bankruptcy in late March, Herbst Gaming reported employing about 5,400 workers. That number was down from the 6,450 employees it reported having in a Dec. 31 report to the Securities and Exchange Commission.

The company's current staffing level was unavailable.

On Oct. 31, U.S. Bankruptcy Judge Gregg Zive approved a plan to hand the company's 15 casinos and 600-location, 6,400-machine Nevada slot route to a group of lenders that hold $876.5 million in debt.

The company owns 12 casinos in Nevada, two in Missouri and one in Iowa. Locally, the company owns the 275-room Terrible's hotel-casino.

The company also owns three Primm casinos -- Whiskey Pete's, Buffalo Bill's and Primm Valley Resort -- which it acquired from MGM Mirage in 2007.

The lenders will receive 100 percent of the company's casinos and slot routes once the company reorganizes. The new company will issue $350 million in new senior secured bank loans as part of the reorganization.

Higgins said it is too early to figure out who the new owners will be -- the lenders were represented by Wilmington Trust Co. during the bankruptcy -- or what effect, if any, the change in ownership will have on the restructured Herbst Gaming.

"It's good to get past the confirmation stage," Higgins said. "The judge took into consideration the plan we put forth and he approved it. And now it's really getting back to focusing on the business at hand while the parties weed out who's going to be the owners and the directors."

Timothy P. Herbst, Edward J. Herbst and Troy D. Herbst will have their equity wiped out by the reorganization. The brothers remain directors of the company with Troy Herbst as the company's chief executive officer.

Higgins said the company will continue to operate its business, looking for opportunities to cut costs but also for areas where the company can grow its business.

"It's really just business as usual for right now," Higgins said. "Obviously, we're in tough economic times and things continue to deteriorate, unfortunately, just like it does for everyone."

Last week, the Gaming Control Board tentatively approved the company adding 75 more machines at five Clark County restaurants to its slot route.

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