The Sands Regent on Dec.
31 carried $13.5 million less debt on its books than it reported just six months earlier, and the company's executives leave no doubt about the thinking: They're on the trail of acquisitions of smaller casino properties in northern Nevada and want to be able to move quickly.
"We have to have the dry powder available," said Ferenc Szony, president and chief executive officer as he discussed the Renobased company's strategy with investors last week.
The company's long-term debt at the end of 2004 stood at $23.2 million compared with $36.9 million six months earlier.
Szony said the company will continue to use its cash flow to pay down debt no dividends are on the horizon as it continues to strengthen a credit line that currently has about $17 million in capacity.
While The Sands Regent has looked at several possible acquisitions in recent months, Szony said none meet the company's target.
Rob Medeiros, chief financial officer, said The Sands Regent is looking for smaller, privately held operations those with earnings before interest, taxes and depreciation of $2 million to $8 million.
The company also wants its acquisitions to post returns in the mid double digits or be able to get there quickly,Medeiros said.
Szony said the market for smaller acquisitions is especially promising these days because the consolidation under way is among the biggest nationwide casino operators.
The properties those companies are forced to divest as the result of mergers, he said, are getting the attention of mid-sized players such as Isle of Capri Casinos Inc.
who otherwise might be chasing the same smaller properties as The Sands Regent.
The company's most recent acquisition, Rail City Casino in downtown Sparks, generated most of the company's revenue growth in the final three months of 2004.
Rail City's revenues totaled $6.2 million as the company's revenues for the quarter grew to $19.4 million from $12.7 million in the last three months of 2003.
The Sands Regent plans to invest about $7.5 million, plus the cost of land, in expansion of Rail City this year.
The expansion to the west of the existing facility will about 50 percent to the casino floor space along with additional bar and restaurant space.With the additional casino floor, the property may house as many as 1,000 slot machines.
The Sands Regency, the company's downtown Reno property, posted essentially flat revenues as 2004 drew to a close.
Szony noted that room nights one room occupied for one night were down by about 3,800 during the quarter, but the company managed to get the average daily rate up to nearly $29 from $27.50 a year earlier.He said the downtown property was hard-hit by weather in late December.
But Szony said the locals-oriented business at Rail City made up the slack during the slow holiday weeks.
The company also owns Gold Ranch Casino and RV Resort at Verdi.
It's one of the biggest ARCO stations in the country, and its sales were nicked during the quarter by a price war launched by service station operators along Interstate 80 in California, Szony said.
