Pinnacle Entertainment announced a deal Thursday to sell an under-construction hotel-casino complex in Lake Charles, La., to the company that owns the Golden Nugget.
The transaction satisfies a portion of a settlement reached with the Federal Trade Commission to avoid any antitrust issues in the Las Vegas-based company’s $2.8 billion buyout of Ameristar Casinos.
Golden Nugget, which is owned by Houston-based Landry’s Inc., will pay for all the development costs spent on Ameristar Lake Charles, up until the closing date of the sale. Golden Nugget also will assume all of the outstanding costs owed on the development at that time. The deal also includes a $37 million credit to Golden Nugget.
Ameristar said it spent $213.9 million on the project as of June 30. The project had a budget of $580 million.
Golden Nugget said it would complete the hotel-casino complex, which is located on 242-acre site adjacent to Pinnacle’s existing L’Auberge Lake Charles. The transaction needs FTC approval and the approval of Louisiana gaming regulators. The project is the last available gaming license in Louisiana.
Golden Nugget operates hotel-casinos in downtown Las Vegas, Laughlin, Atlantic City and Biloxi, Miss. The company also operates more than 500 national restaurant outlets under nearly a dozen brands.
“Due to our strong presence with all of our brands in the Texas and Louisiana markets, we are confident that we can grow gaming revenues in Lake Charles,” Landry’s Chief Executive Officer Tilman Fertitta said in a statement.
Credit Suisse gaming analyst Joel Simkins said Pinnacle could face a strong challenge in Lake Charles from Golden Nugget, calling Fertitta an “increasingly seasoned entrepreneurial” competitor.
“Mr. Fertitta is a wealthy and connected Texan who may be able to leverage his restaurant chains as well as Galveston area attractions to drive visitation to Lake Charles, in addition to potentially stymying (gaming) legislation in his home state,” Simkins said.
Pinnacle told the Missouri Gaming Commission Wednesday it hopes to finalize an agreement to sell its Lumiere Place casino in downtown St. Louis within two weeks, which would satisfy the second part of the FTC’s concern with the Ameristar deal.
Pinnacle hopes to close the purchase of rival regional gaming operator Ameristar by the end of August. Missouri gaming regulators approved the deal Wednesday, giving the transaction the final state authorization needed. Pinnacle will double in size to 16 casinos in nine states.
Pinnacle CEO Anthony Sanfilippo said Thursday the company believes there will be $40 million in cost savings through the merger of the two regional gaming companies. Pinnacle will acquire two small casinos in the Northern Nevada community of Jackpot near the Idaho border as part of the transaction.
“We have spent considerable time meeting with the leadership of both the Pinnacle and Ameristar properties and are increasingly excited about the opportunities, scale benefits, and synergies that will be created by the combination of these two very complementary asset portfolios,” Sanfilippo said.
Pinnacle also announced second-quarter earnings Thursday, saying it had a net loss of $5.1 million in the quarter that ended June 30. The net loss translated into a loss per share of 9 cents. A year ago, Pinnacle reported net income of $11.9 million and earnings of 19 cents per share.
Pinnacle said its second-quarter revenues increased 5.7 percent to $315.3 million, but the figure included $36.6 million in revenues from the L’Auberge Baton Rouge, which didn’t open until last September.
Ameristar Casinos also reported second-quarter results, saying revenues fell 1.7 percent to $291.3 million.
Analysts were not surprised by figures, saying that regional gaming markets were expected to have diminished results during the three-month period.
“The big news today, however, is that Pinnacle entered into a definitive agreement to sell the Ameristar Casino Lake Charles development,” JP Morgan gaming analyst Joe Greff told investors.
Shares of Pinnacle closed at $19.70 Thursday on the New York Stock Exchange, up 76 cents or 4.01 percent.
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871. Follow @howardstutz on Twitter.