Boyd Gaming To Sell Vegas Casino
July 26, 2006
Boyd Gaming Corp. said that it was disappointed in the performance of its newest Las Vegas casino and it will sell the seven-month-old South Coast property to Michael Gaughan, the founder of the Coast Casinos chain it merged with two years ago.
The announcement, combined with Boyd's 79 percent drop in second-quarter net income and less-than-expected profits from chief rival Station Casinos Inc., stoked analysts' fears of weakening demand for gambling among Las Vegas residents.
Boyd's announcement of the sale of the 600-room South Coast Hotel & Casino came less than a year after it opened in December at a cost of about $583 million. The property five miles south of the Las Vegas Strip has attempted to cater to horse lovers with its 1,200-stall equestrian center.
Revenue at the property suffered from "continued softness," the company said. Gaughan agreed to pay Boyd an amount equal to the net proceeds from the sale of 15.8 million Boyd shares, divesting him of his entire 17.7 percent stake in Boyd.
At Tuesday's closing price of $36.49, those shares were worth $576.5 million. After the announcement at the close of the market, Boyd shares fell 99 cents or 2.7 percent to $35.50.
Boyd said second-quarter profit tumbled 79 percent to $10.2 million, or 11 cents per share, on higher pre-opening expenses and write-downs related to the retirement of one of its original gambling boats. Las Vegas-based Boyd Gaming operates 19 casino entertainment properties in six states and jointly owns the Borgata in Atlantic City, N.J.
Revenue increased 10 percent to $610.9 million from $554.3 million. On average, analysts polled by Thomson Financial expected income of 57 cents per share on sales of $623.4 million. |
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