Louisiana projects in need of financing
AP Business Writer
Baton Rouge, LA â€” In the face of the national credit meltdown, Louisiana gambling regulators have approved 90-day delays in the schedules for new casinos in Baton Rouge and Lake Charles being built by Pinnacle Entertainment Inc.
Pinnacle officials told the Louisiana Gaming Control Board on Tuesday that although the Las Vegas-based company is in good credit shape, financing for gambling projects has dried up. Officials said they are enthusiastic about finishing both riverboat-hotel projects â€” and will continue work while watching for possible openings in credit markets.
The delays, approved without objection, came the same day the three Atlantic City casinos once run by Donald Trump filed for Chapter 11 bankruptcy protection for the third time.
At least three major casino building projects have been stopped completely in Las Vegas, representing about $33.5 billion, while $11.6 billion in projects outside of Las Vegas have been put on hold because of a lack of consumer confidence, reduced tourism and almost-impossible-to-get loans, said Carlos Ruisanchez, a Pinnacle senior vice president.
“Effectively, the lending to corporations has stopped,” he told the board.
The Baton Rouge delay involves the formal presentation of a construction contract that had been due Wednesday. In Lake Charles, where Pinnacle already has one casino, the delay will push the state-mandated completion date from April 30, 2010, to July 30, 2010.
Ruisanchez said that among casino companies, Pinnacle is in a strong position. The company is not issuing a shareholder dividend and is not using money to buy back its own stock, both of which would eat capital, he said.
The company also has put on indefinite hold plans for a $2 billion mega-casino in Atlantic City â€” where it has said it might be willing to sell the land. Pinnacle also pulled out of the competition for a Kansas City casino and stopped some expansion plans in Indiana.
Pinnacle senior vice president Jack Godfrey said focused attention is aimed at Louisiana, where the company owns the L’Auberge Du Lac casino in Lake Charles â€” typically the biggest gambling revenue draw among the state’s 13 riverboats â€” along with Boomtown casinos in Bossier City and the New Orleans suburb of Harvey.
At the Sugarcane Bay project in Lake Charles, work is under way on major infrastructure improvements and Pinnacle expects permission â€” perhaps within a matter of days â€” to begin driving piles for buildings.
In Baton Rouge, the company said it has control of 560 acres along the Mississippi River for its $250 million gambling-entertainment project and will continue working on its construction contract and plans for the gambling riverboat in the interim.
About $45 million of the expected $350 million budget for Sugarcane Bay has been spent, Ruisanchez said.
“We don’t want to go with a project in earnest unless we are assured of having the money to finish it,” he said.
Godfrey wouldn’t say if another delay might be sought. That, he said, depends upon whether credit markets loosen in the next few months.
“We’re going to see what happens,” Godfrey said. “Unfortunately, like everyone else, we don’t have a crystal ball.”