New ETF Book by Larry Connors - Click here to read more
During a conference call Tuesday with analysts, Boyd Gaming Chief Executive Officer Keith Smith said Station Casinos executives dismissed the company's Feb. 23 offer to purchase a significant portion of its rival for $950 million as a half-hearted gesture.
Smith said the bid is real. Boyd Gaming has a $2 billion line of credit designated for Echelon that can now be directed toward acquisitions.
"Let me be clear. This is a serious offer," Smith said in prepared remarks Tuesday. "Bankruptcy can be a distracting and expensive process and it does not appear to be in the best interests of anyone for this to drag on."
Station Casinos filed for Chapter 11 bankruptcy protection at the end of July. Last week, company attorneys asked the court to extend a deadline for the exclusivity period for filing a plan of reorganization until March.
After the earnings call, Smith said buying key assets within Station Casinos' 18-property portfolio in Southern Nevada makes sense for all parties, including Boyd Gaming shareholders, customers, and Station Casinos' creditors, employees and customers.
"We can deliver more value to the creditors with a fair offer and these assets," Smith said. "We believe strongly in the long-term viability of the Las Vegas market."
Station Casinos declined comment.
Smith added that Boyd might be interested in acquiring "distressed" properties and looking at opportunities in regional gaming markets.
Boyd Gaming suspended construction of Echelon on the site of the former Stardust more than a year ago, saying it would consider restarting efforts after this year. However, the continuing recession and the December opening of CityCenter may continue to depress the Las Vegas market.
"Given the ongoing weak economic conditions, the significant new supply coming online and a difficult capital-market environment for projects of this nature, resuming construction in the near term is not an option," Smith said.
It will cost Boyd Gaming $15 million this year to maintain and secure the Echelon site, which has several steel structures in place. The company expects the annual costs to go down next year and has no plans to remove any of the structures.
The recession also reduced Boyd Gaming's third-quarter profits. The casino operator said its net income fell about 27 percent in a period that ended Sept. 30.
Boyd Gaming said its net income was $6.3 million in the quarter, or 7 cents per share, compared with $8.7 million, or 10 cents a share, for the same period a year ago. Analysts polled by FactSet Research estimated, on average, the company would report earnings per share of 12 cents.
Boyd said revenue fell 6.6 percent in the quarter to $398.2 million. The company blamed the slump on reduced consumer spending, especially in Las Vegas.
"Improved results in our downtown Las Vegas, Borgata, and Midwest and South regions helped offset softness in the Las Vegas locals market," Smith said. "While visitation levels remained fairly constant, spend per visitor continues to be down significantly year over year, as consumers are still being cautious with their spending."
Shares of Boyd fell $1.90, or 17.79 percent, on the New York Stock Exchange to close at $8.78.
JP Morgan gaming analyst Joe Greff speculated that the Las Vegas economy may continue to suffer into next year, adversely impacting the company's results.
"While Boyd has done a commendable job reducing operating costs in the locals market, the headwinds from record Las Vegas unemployment and foreclosure activity, which we believe will take some time to improve, are proving to be too much as it relates to net revenue growth, something we do not see as a 2010 event," Greff told investors.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
To see more of the Review-Journal or to subscribe to the newspaper, go to http://www.lvrj.com. Copyright (c) 2009, Las Vegas Review-Journal Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.
