PNK NOTES FROM LV MEETING

No real changes yet despite Dan Lee’s departure.  The potential is there for a higher ROI focus and possibly a sale of the company, in our opinion.  November a little sluggish.  Here are our notes.

Interim CEO

  • Temporary
  • Already met with the search committee.   
  • They want an operations backbone and cultural fit and there will be some development as well.  They believe that there is some value in the LA licenses given the low tax rate so development background is helpful.  
  • Wade Huntley (former COO) is the #1 name that has popped up - doesn't even know if he's interested.  Want both an operations and development guy (Kentucky/Massachusetts).
  • Interim CEO is doing a lot - making rounds to all gaming commissions.  The interim CEO was fairly involved in operations before.

No real changes since Dan Lee left.  The balance sheet is all Steve Capp anyway.  Operations are, of course, overseen by the COO.  Dan was really development focused and River City is in great shape.    

Credit extension by December - unclear how the Dan Lee issue affects this.  It was going very smoothly – it’s only 18mm drawn - and if they don't populate Sugarcane Bay gets stalled. 

What is the board's view on development?  There was always some push back.  River City should open in March or April. Sugarcane bay is really just piling work right now.  Baton Rouge is paper shuffling.  The new CEO will reevaluate everything that's going on.  Piling work will take them through 2Q2010.  They were targeting 2H2012.  

Even if they wanted to, it’s unclear whether LA will allow them to lower the budget on sugarcane. Need approval.

At River City slots are already there and some are being tested.

November trends have been typically slow and consistent with what they have seen over the last few months.  They are not worried about gas prices.

Admiral – the gaming commission told them they could repair the boat.  Trying to figure out how much that would cost. Probably somewhere in the mid-to-high single digit MMs.  Elections are in April - hull expires July 2010.  It’s too risky to wait till April when the guy in office gets kicked out.  Risk is where that boat goes - can't move license with gaming commission approval.  Rumor has it that Gene McNarry has ties to North County which is trying to get a casino.

It’s easier to get extensions on the backend.  Something as simple as getting the boat under construction which would cost $30mm and can always be moved. 

Will management now be required to actually own stock in the company rather than just options?

He does agree that they are in the dog house regarding this issue.  However no one has exercised any stock at a profit. Restricted stock - ISS dings them for owning restricted stock versus options.  Stupid answer, I think.  Issue of no downside from stock declines, just options.

He thinks that the property level management and capital allocation strategy could change.