|By Jason Blevins, The Denver Post|
Knight Ridder/Tribune Business News
Jun. 2, 2004 - A Las Vegas-based casino operator is buying the Mountain High Casino in Black Hawk for $115 million, ending a turbulent history for the state's newest casino, mired in bankruptcy proceedings since 2002.
The buyer, publicly traded Ameristar Casinos Inc., says it plans to invest $75 million in the casino to build a 300-room hotel, expand parking and add cashless slot machines.
The company, which operates six casinos in Missouri, Iowa, Mississippi and Las Vegas, and had $809 million in revenues last year, on Tuesday formally announced its purchase of what is considered to be the largest casino in Colorado.
"We definitely felt the market is strong enough to make this a worthwhile investment," said Ameristar chief financial officer Tom Steinbauer. He noted that a new highway into Central City opening in November should fuel traffic to Central City and Black Hawk, and that a proposed Indian casino outside Denver was not a deterrent.
"We think Mountain High is an excellent fit for our overall corporate strategy, being, in our mind, the best-quality facility in the market," Steinbauer said.
The deal gives bankrupt Mountain High developer Windsor Woodmont Corp. additional payments for the first four years of Ameristar's ownership. Those payments provide Windsor Woodmont 10 percent of the casino's earnings beyond predetermined amounts.
The company today is controlled by its bondholders, who with Tuesday's sale announcement stand to receive some return on their investment.
The deal marks the second time in a month that a Las Vegas gaming operation has moved into Black Hawk. Golden Gaming, which operates slot machines and gaming taverns in Las Vegas, announced last month that it was acquiring the Mardi Gras Casino from a group of investors that spent $70 million to build the 4-year-old casino.
Black Hawk-based developer Windsor Woodmont spent $150 million to build the Mountain High Casino, which opened in December 2002 as the company's first and only casino. The 425,000-square-foot complex opened as the Black Hawk Casino by Hyatt and quickly fell into financial turmoil. Within 11 months of opening, Windsor Woodmont declared bankruptcy, accusing Hyatt Gaming of mismanagement. When Windsor filed for bankruptcy, it reported $152.5 million in debt -- $100 million of which was financed at 13 percent -- and $139.4 million in assets. In April 2003, Windsor agreed to pay Hyatt $18.4 million to end a 20-year management contract, and the company renamed the casino Mountain High.
Without Hyatt and with a new name, the casino continued to struggle but made some improvements in its operating performance. For the first three months of 2004, Windsor reported $14.8 million in casino and dining revenues, up 7.6 percent from the same period in 2003. In March, Windsor reported $150.3 million in debt and $119.4 million in assets.
"I think we made some spectacular improvements to operations that enabled us to get a bid of this magnitude," said Windsor Woodmont CFO Mike Armstrong. "We just weren't able to make those improvements fast enough to save Windsor Woodmont."
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