A newly organized company that will operate three Mesquite casinos gained final approval to proceed Thursday from the Nevada Gaming Commission.
The new company, Mesquite Gaming LLC, formed following the bankruptcy of Randy Black's casino company, will operate the Casablanca, Virgin River and Oasis casinos in Mesquite, about 85 miles northeast of Las Vegas.
Black, chief operating officer of Mesquite Gaming, expressed confidence to the commission that the company would be successful moving forward.
He said no one had anticipated how the recession would devastate the gaming industry in Mesquite.
"The economy put us in a situation that we could not recover from," he said.
The panel voted 5-0 to license the company.
Black Gaming filed for Chapter 11 bankruptcy protection in March 2010 and the U.S. Bankruptcy Court in Las Vegas, confirmed the restructuring plan four months later.
Under the terms of the plan, the company's debt was reduced from $225 million to $62.5 million, and a $15 million loan from Wells Fargo Bank was paid off. Mesquite Gaming also will have access to a $10 million line of credit from Nevada State Bank.
Black said the plan was consistent with the company's effort to reduce its debt and interest payments. The company's debt service has declined from $22 million to $5.3 million annually.
The commission also approved the licensing of five board members for Mesquite Gaming, including Black, Anthony Toti, chief executive officer of the new company; Timothy T. Janszen and Ryan Langdon for Newport Global Advisors LP; and Katherine Banuelos to represent the family of Michael Gaughan.
Newport Global Advisors, an investment company in Woodland, Texas, will own 40 percent of the company, while Toti will own 25 percent and the Gaughan family will own 25 percent. Black will have a 10 percent stake.
Black said he expects to regain full control of the company in the near future by buying out Newport Global Advisors and the other companies, as well as individuals who helped refinance the company after it declared bankruptcy.
Toti told the commission that Mesquite Gaming would continue its current business strategy of positioning properties as a getaway for Las Vegas and Utah residents. He said the hotel rooms have been upgraded and the company has been focusing on direct marketing to 120,000 customers in its database.
Toti said the company has been successful with its event and food driven promotions, which has led to increasing its market share from 50 percent to 60 percent in Mesquite. The company fortunes have been tied to those of Mesquite, which after 30 consecutive months of gaming revenue declines welcomed two straight months of positive results in May and June.
Asked by Commissioner Joseph Brown what the company intends to do with the Oasis property, Todi said it remains closed but its future depends on the health of the economy. He said the company could refurbish the property if the economy improves.
For now, Toti said, the Oasis would continue to be used for occasional guest overflow and maintain a handful of timeshare units.
Both Toti and Black assured commissioners they were comfortable with Newport Global Advisors and the Gaughan family as partners in the new company.
Janszen said the private investment firm focused on "unleveraged buyouts," or companies that have "stumbled and had too much debt." Besides Mesquite, the investment company also is an investor in Reno.
The firm's first venture in the gaming industry was in 2007 with the purchase of the Eldorado Hotel Casino in Reno. Janszen said the firm purchased a 20 percent stake in the company's debt and converted it into equity.
Mesquite Gaming represents a total investment of $10 million by Newport Global Advisors. He assured commissioners the new company's debt load was manageable.
"If we have to put more money in, we would," Janszen said. "We don't need to."
Contact reporter Chris Sieroty at firstname.lastname@example.org or 702-477-3893.