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Barrick Gaming Dismisses Concerns

7 February 2003

by Jeff Simpson

LAS VEGAS -- A Barrick Gaming Corp. executive Thursday dismissed concerns that the company is having problems raising funds to buy a collection of downtown casino and motel properties.

In fact, Barrick Gaming has already spent $1.3 million for its $82 million deal to buy the Plaza, Western, Gold Spike and the Las Vegas Club, Barrick Chief Gaming Officer Phil Flaherty said.

"The financing isn't a question," Flaherty said of ongoing efforts by Barrick and investment banker Legg Mason to raise funds for the purchase of the downtown properties.

Barrick also plans to buy two downtown Ambassador East motels and has an option to buy Jackie Gaughan's El Cortez.

All of the properties are owned in whole or in part by Gaughan; the estate of the late Mel Exber owns parts of several properties.

Gaughan's son, Coast Casinos Chairman Michael Gaughan, said Barrick's ability to raise the money is the big remaining question about the deal, which was announced in December.

"They want it to go, but will it?" Gaughan asked Thursday. "I don't know. I guess it depends if they can raise the money."

Flaherty, however, brushed aside concerns about his company's ability to finance the deal.

"The issue isn't raising the money, it's the pricing of the money," he said.

In fact, Flaherty said that today's nervous financial markets are really a plus for a company like Barrick looking to make a score on undervalued downtown real estate.

"This is the best time to do a deal," he said. "The best time to do a deal is during a downturn. The smart money knows this is the best time to buy. Once we finish blowing up Iraq, there will be a settling down."

Michael Gaughan noted that the 35 acres Barrick is buying represents a good chunk of downtown real estate for the price, and suggested that Barrick Gaming's buying may not be over.

"This is as much a real estate deal as a hotel deal," he said. "They're looking at all the land (downtown). They want all the land."

Flaherty agreed, although he declined to say whether Barrick Gaming has negotiated to buy other downtown casinos. He did say that Jackie Gaughan's downtown land can best be used for two purposes: adding new hotel rooms and adding convention space.

Barrick plans to do both, conventional thinking about downtown's stagnant economy aside.

He noted, for example, that there is room at the Plaza to add an additional 2,000 rooms.

"Downtown's not dying, downtown's just not growing," Flaherty said.

In the meantime, Flaherty said his company is moving forward with plans to close the $82 million deal.

Barrick Gaming has filed its Nevada gaming license applications and is preparing to file for its city of Las Vegas license, Flaherty said.

He said the $1.3 million the company has spent already includes payments for operating costs, legal expenses and deposits.

One unspecified deposit was paid when the letters of intent to buy the properties were signed, and a second was paid when the contract was signed, he said. The deposits are a six-figure amount, he added.

Gaughan's properties will continue to be operated by current management until Barrick receives a gaming license to operate the casinos. If awarded a license, Barrick would then complete the transaction, paying Gaughan and the remaining property owners and taking over the operation of the hotel-casinos and motels, including responsibility for 1,904 employees and 1,850 hotel rooms.

Barrick Gaming is a subsidiary of Barrick Corp., part of the Barrick family of businesses that also includes banking, mining, ranching, and a number of other business ventures.

The company is unrelated to Canadian-based mining concern Barrick Gold Corp.

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