Nevada Gold &Casinos Inc., a Las Vegas-based gaming company, expects to begin the new year in a stronger financial position after refinancing its long-term debt with a new five-year, $12.75 million revolving line of credit.
“Not only did we significantly reduce our borrowing rate from an all-in effective rate of 12 percent down to 6.5 percent, the revolver also provides us with some cash management flexibility,” Nevada Gold President and CEO Michael Shaunnessy said.
Shaunnessy said the company also used some excess cash to reduce its outstanding long-term debt by $1.2 million. He said with the new financing in place Nevada Gold’s long-term debt is now $12.75 million.
Mutual of Omaha Bank provided the new revolving credit facility for Nevada Gold, a developer, owner and operator of 10 minicasinos in Washington state and an 811-slot route in 18 locations in Deadwood, S.D.
The company also has a social gaming application, Gold Star Slots, on Facebook and available in the Apple store, and a gaming license in Nevada. Shares of Nevada Gold rose 2 cents, or 1.67 percent, to $1.22 on the American Stock Exchange.
Shaunnessy said the lower interest rate and shrunken debt will reduce the company’s annual interest expense by $700,000. He said reduced interest expense will increase annual earnings by 3 cents a share.
“The new facility … provides greater financial stability for Nevada Gold as well as significantly improving our cash flow,” Shaunnessy said.
Nevada Gold also reported a second-quarter profit of $220,757, or one cent per share, compared with a loss of $819,008, or 4 cents a share, a year earlier.
Revenue fell 0.2 percent to $16.34 million from $16.38 million.
“We delivered solid results for the second quarter in a difficult revenue environment, and are now moving into the two stronger quarters for our Washington operators,” Shaunnessy said.
Shaunnessy said the company’s operating results reflected a “significant rebound in our Washington operations from the difficult first quarter.”
Quarterly revenues in Washington were $13.4 million, up $400,000 from a year earlier.
In South Dakota, Nevada Gold generated revenues of about $2.9 million, down 13 percent from the prior year. The company’s slot route in Deadwood was recently reduced from 950 to 811 machines.
“The South Dakota gaming market experienced an 8 percent decline during that same period, and our results reflect the market, as well as our previously announced reduction in units,” Shaunnessy said.
He said the cost reductions should help operating performance in South Dakota as the company moves into the slower period of the year there.
Shaunnessy said his company was focusing on costs while continuing to explore new revenue opportunities.
“We are actively searching for new properties and management contracts that fit (our) investment parameters and enhance shareholder value,” Shaunnessy said.
Contact reporter Chris Sieroty at email@example.com or 702-477-3893. Follow @sierotyfeatures on Twitter.