Atlantis parent refinancing debt

Monarch Casino & Resort Inc., parent company of The Atlantis, expects this week to finish refinancing of a big bank debt package.

The credit package comes due June 30; Monarch said it expects to complete a refinancing by Friday.

The debt, which stood at about $47 million at the end of last year, is large enough that Monarch's ability to pay it down is a key factor in growing its net income.

In the final three months of last year, Monarch paid down the debt by about $2 million.

As the size of the debt declined and interest rates remained at relatively low levels, Monarch said its costs of servicing the debt fell by 26 percent during the fourth quarter compared with a year earlier.

The loan with a consortium of banks is personally guaranteed by the three brothers who serve as co-chairmen of the company John, Ben and Bob Farahi.

They're paid a guarantee fee equal to 2 percent annually of the outstanding balance on the loan, and so the company's repayment also reduces the fees it pays to its co-chairmen.

Paying down the debt, which stood at $64 million about two years ago, has been a priority for Monarch's management.

The benefits were clear as the company announced its earnings last week.

In the fourth quarter, the 26 percent decline in borrowing costs was the major contributor to a 36.4 percent increase in net income.

Monarch's net for the quarter was $1.77 million compared with $1.3 million a year earlier.

Revenues for the quarter were $28.3 million compared with $27 million a year earlier an increase of 4.8 percent.

Casino revenues, the company said, were up 7 percent during the quarter and hotel revenues were up 2.2 percent.

For the year, Monarch reported net of $9.6 million compared with $8.6 million a year earlier.

Revenues for the year were $134.7 million compared with $128.4 million in 2002.

John Farahi said hotel revenues were up 4.6 percent for the year, and casino revenues rose 5.9 percent during 2003.

Farahi said the company's improved results for the year came despite the costs of litigation with the city of Reno and higher state gaming taxes.

Those two factors, he said, cost Monarch about $505,000.

Monarch and the city this month settled litigation over the city's condemnation of the Old Reno casino and plans to move its gaming license elsewhere in the city.

The company's performance has drawn the attention of some big purchasers of its common stock in the past 10 days.

In a filing with the Securities and Exchange Commission, Liberty Wanger Asset Management LP of Chicago said it purchased 912,700 shares of Monarch's common 9.8 percent of the shares outstanding.

In another SEC filing, Friedman, Billings, Ramsey Group Inc.

of Arlington, Va., said it purchased 500,500 shares.

That's 5.4 percent of Monarch's outstanding shares.

In mid-January, Akre Capital Management LLC of Middleburg, Va., reported it bought 782,955 shares 8.4 percent of Monarch's common.

Each of the purchasers told the SEC they bought Monarch's stock as an investment rather than part of a bid to acquire the company.