Harveys merger talks stall
Talks of Harveys Casino Resorts’ $1.28 billion buyout of Pinnacle Entertainment have stalled as financing issues get ironed out.
The Stateline casino announced it was postponing plans to sell $675 million of high-yield securities that were to help finance the acquisition of Pinnacle, a gaming company based in Glendale, Calif., that owns and operates eight casinos in Nevada, Mississippi, Louisiana and Argentina, the Bloomberg financial service reported. Pinnacle is also building a major casino complex in Indiana. Harveys also owns casinos in Iowa and Colorado.
Harveys, which is run by the private investment firm Los Angeles-based Colony Capital, first agreed in April to buy Pinnacle for $24 a share plus the assumption of about $650 million in debt.
Investors have demanded higher yields on corporate debt amid rising corporate defaults and concerns about a slowing economy in recent weeks, Bloomberg adds.
Pinnacle shares fell 28 percent on the New York Stock Exchange Thursday, upon notice the deal was temporarily tabled. Its stocks closed at 15.31 a share, after trading swung from a high of 16.38 to a low of 14.25.
Dennis Forst, an analyst at McDonald Investments Inc., said the companies might be waiting to see if the Federal Reserve lowers interest rates by the end of March 2001, as some are expecting.
“Rates have gone up dramatically since when they announced the deal,” Forst said. “It probably got to the point where it didn’t make sense. There’s a lot of reasons it should go on.”
Harveys Senior Vice President of Corporate Sales and Marketing Jim Rafferty and Pinnacle Entertainment spokesman Owen Blicksilver declined to comment on the current breakdown of the deal, except to confirm information in an issued press release.
The proposal is subject to regulatory approval.
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