News for the Hospitality Executive
Boyd Gaming Halts Construction of the Partially
$4 billion Echelon Project on the Las Vegas Strip
Blames Current Economic Conditions, Suspends Quarterly Dividend
LAS VEGAS, Aug. 1, 2008 - Boyd Gaming Corporation (NYSE: BYD) today reported Key Highlights for the second quarter ended June 30, 2008.
-- Our Board of Directors has authorized an amendment to our existing share repurchase program to increase the amount of common stock available to be repurchased to $100 million. The Board also suspended our quarterly dividend program, which they believed was not adequately valued in our share price at recent trading levels.
Key Operating Highlights
-- Las Vegas Locals segment records second quarter 2008 net revenues
and Adjusted EBITDA(1) declines of 6.3% and 6.6%, respectively, as economic
conditions continue to impact consumer spending; despite these declines,
Adjusted EBITDA margins were consistent with the year ago quarter.
Due to the difficult environment in today's capital markets, as well as weak economic conditions, we have decided to delay our Echelon project on the Las Vegas Strip. Our present expectation is to resume construction in three to four quarters, assuming credit market conditions and the economic outlook improves.
We are in discussions with Morgans Hotel Group and General Growth Properties (GGP) to modify our existing agreements, as both joint venture parties remain interested in Echelon. The delay will allow our joint ventures with Morgans and GGP the opportunity to secure financing under more favorable conditions at a later date. It also provides additional time for our joint venture with GGP, the High Street retail promenade, to take advantage of an improved leasing environment, once economic conditions moderate.
From the beginning, we strategically designed Echelon to be developed in a single phase, and this schedule adjustment allows us to preserve the holistic integrity of the project. By delaying, we will be able to better manage the timing of the construction of the wholly-owned aspects of Echelon and ensure that they do not outpace the construction of the joint venture components. This delay will also give us time to focus on restoring momentum in our core business, and for consumers in general, to regain their footing and confidence.
Keith Smith, President and Chief Executive Officer of Boyd Gaming, commenting on the decision to delay Echelon: "The current economic climate is unprecedented in recent years. While we remain enthusiastic about the long-term prospects for the Las Vegas market and Echelon, this is the right decision for our Company at this time. This decision is not a reflection of the merits of the project, nor the accomplishments of our professional development team, but rather the challenges we, and many other businesses, face in today's uncertain business climate.
"We remain fully committed to Echelon, and convinced that it will produce long-term, sustainable growth for our Company in the years to come. We look forward to resuming construction as soon as we are able to do so."
As of the June 30, 2008, we have incurred approximately $500 million
of capitalized costs related to the overall project.
Boyd Gaming Corporation
|Also See:||Morgans Hotel Group Co. and Boyd Gaming Corporation Assemble Team of Designers and Architects for the new Mondrian and Delano hotels at Echelon in Las Vegas / June 2007|
|Boyd Gaming Contracts with Shangri-La Hotels to Operate Proposed 400-room Hotel at the Echelon Place Development on the Las Vegas Strip / January 2006|
|Supersized Projects Transforming Hotel-casino Financing; Private Equity Emerges as an Important Financing Structure / Novmeber 2006|
|Boyd Gaming Corp. Plans to Tear Down the Stardust Hotel and Casino to Make Way for a $4 billion Mega Complex; Will Include Four Hotels with 5,300 rooms, Convention Space Will Exceed One million Square Feet / January 2006|