LAS VEGAS, Sept. 2, 2005 - Pinnacle's CEO, President
and Senior VP of Construction have just returned from assessing the damage
in the Gulf Coast and New Orleans region and the Company has established
a plan for recovery. Pinnacle has two properties in the region that
were directly affected by the hurricane, Boomtown New Orleans and Casino
Magic Biloxi.
"Hurricane Katrina has been a terrible natural
disaster," noted Daniel R. Lee, Chairman and CEO of Pinnacle Entertainment.
"Many of our employees and customers in the region have lost their homes
and many of their possessions. Very few have escaped from the storm
unscathed. We are determined to do everything that we can do as a
company to help the region rebuild and help our employees return to their
normal lives as quickly as possible."
Pinnacle is moving quickly to assess the situation
and support its employees. That includes moving forward to try to
get both properties reopened and functional as quickly as possible.
In the meantime, Pinnacle has continued to pay the base pay and provide
other benefits to all its employees. It is Pinnacle's intent to get its
employees back to work in some capacity as quickly as possible so that
they can have continuation of employment and income.
Boomtown New Orleans
Property damage to the Company's Boomtown New
Orleans property is believed to be minimal. The property has remained
closed since before the hurricane hit and has not been flooded. The
Company has hired private armed protection services to protect its property
and there has been no looting at the facility.
The West Bank of the Mississippi, where Boomtown
is located, appears to be in much better condition than the East Bank.
The City of New Orleans and the heavily flooded St. Bernard Parish are
on the so-called East Bank, between the Mississippi River and Lake Pontchartrain.
The flooding in the region is principally from levees breached from Lake
Pontchartrain.
Boomtown is currently being used as a base for
utility crews attempting to restore electricity to the area. The
Company is planning to provide food and shelter in its ballrooms and buffet
to such crews. Boomtown New Orleans is bringing some employees back to
work to provide security, food, housekeeping and other services to the
utility crews based at the property. Boomtown also intends to continue
to provide employment and financial assistance to all its employees until
the property can resume normal operation.
Based on what is known today, the Company intends
to reopen Boomtown soon after normal power and utilities are restored and
governmental authorities determine that it is safe and appropriate for
people to return to the West Bank. Current estimates by governmental
authorities are that it may be as little as a week or as much as a month
or more before people can return to the area.
Casino Magic Biloxi
The damage to Casino Magic Biloxi is extensive.
The large storm surge in the Biloxi area caused the casino barge to snap
clear of its moorings and the barge is now located several hundred feet
from the water, on the north side of Highway 90. The Company's high-rise
hotel was also extensively damaged. The Company is arranging, and
will coordinate with its insurers, for structural engineers to determine
if any portion of its Biloxi buildings can be salvaged. In the meantime,
Pinnacle has contracted with armed protection services to safeguard its
Biloxi property and to prevent people from entering potentially unsafe
structures.
Pinnacle currently intends to rebuild in Biloxi.
The Company is preliminarily working with the same team of architects,
designers and general contractors who recently worked so well and efficiently
together to build its Lake Charles casino hotel. Subject to approval
of its insurers, management believes that using the same team may be the
most efficient way to rebuild the Biloxi facility as quickly as possible.
This team includes the Bergman, Walls & Associates architectural firm
and Avery Brooks & Associates design firm from Las Vegas, and the Houston-based
Manhattan Construction Company. Pinnacle has also reached out to
the relevant governmental authorities for direction as to the type of reconstruction
that will be recommended or permitted, such as whether the replacement
casino facility should be land-based or built over water.
"The well-being of our employees and their families
is a very high priority for us," stated Mr. Lee. "We intend to take
the unusual measure of requiring our General Contractor for the rebuilding
effort to give preference to our existing employees for all reconstruction
jobs. Manhattan's management has indicated their enthusiasm in assisting
us in this effort. While the architects and contractors are getting
organized, we intend to arrange training programs where necessary for our
employees to learn skills appropriate for the construction environment.
For many of our employees willing to work with us to rebuild and reopen
our Biloxi facility, we hope to provide continuation of employment and
income throughout the reconstruction period."
Other Relief Efforts
Pinnacle's sister properties have also been asked
to assist in the relief efforts. Truckloads of clothing, food, water
and other supplies have already been sent from the Pinnacle properties
in Bossier City and Lake Charles and will be distributed to Pinnacle employees
in Biloxi and New Orleans. Similar efforts are being organized at
the Company's Belterra property in Indiana and even at Boomtown Reno and
the corporate headquarters in Las Vegas. Such relief supplies include
both donations from Pinnacle itself and from Pinnacle employees.
Pinnacle is also making it easy for employees
to make donations to the American Red Cross through a payroll deduction
program, with such donations designated for Hurricane Katrina relief.
Pinnacle will match dollar for dollar the first $300,000 of such donations.
Pinnacle is also allowing its employees to donate accrued vacation time
to the relief effort. The Company will make both a cash donation
and the above matching donation to the American Red Cross equal to the
value of any accrued "paid time off" that is donated by any Pinnacle employee.
Employees who have questions should contact the
Company's representatives via the Pinnacle Employee Hotline at 1-800-665-8738.
Insurance
At the time of Hurricane Katrina, Pinnacle had
$400 million of property and casualty insurance.
The Company's insurance coverage is complex and
is still being reviewed by the Company's lawyers and insurance consultants.
Based on the size and cost of the Company's other recently completed or
planned construction projects, management believes that the insurance coverage
should be sufficient to replace the Biloxi facility. The Company
has a 3% deductible for this type of loss. The Company is also insured
for business interruption.
Hurricane Katrina is also having an impact on
the Company's operations in Lake Charles and Bossier City. Both properties
are now housing some guests who are from the hurricane damaged areas and
who are understandably gambling less than the Company's normal guests.
Also, people in the broader region, ranging from east Texas and throughout
the South, are distracted by the crisis and in many cases pitching in with
the evacuation and recovery efforts. Management believes that this impact
on the Company's Lake Charles and Bossier City properties may be temporary
and is not expected to be particularly damaging to its second half results.
About Pinnacle Entertainment
Pinnacle Entertainment owns casinos in Nevada,
Mississippi, Louisiana, Indiana and Argentina, owns a hotel in Missouri,
and receives lease income from two card club casinos in the Los Angeles
metropolitan area. The Company opened a major casino resort in Lake Charles,
Louisiana in May 2005 and a new casino in Neuquen, Argentina in July 2005.
Pinnacle has also been selected for two casino development projects in
the St. Louis, Missouri area. The casino operations in St. Louis
are dependent upon final approval by the
Missouri Gaming Commission.
All statements included in this press release,
other than historical information or statements of historical fact, are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.
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