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Merger Kill Fee Hands Aztar Net Loss

LAS VEGAS-Leaving locally based Pinnacle Entertainment at the altar turns a $12-million profit into a $66-million net loss. Revenue from its Tropicana property here was off 5%.

By Brian K. Miller | Updated on July 21, 2006

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LAS VEGAS-Aztar Corp., the Phoenix-based owner of the Tropicana here, posted a $66.1-million net loss for the second three months of the year. The company would have posted a $12-million profit were it not for $78-million in kill fees it had to pay Pinnacle in order to sever its merger agreement in favor of a higher offer from Winmar Tahoe Corp. (dba Columbia Entertainment), a subsidiary of Kentucky-based Columbia Sussex Corp. While Columbia covered the cost of killing the deal with Pinnacle, the money must be reported as a liability.

Second-quarter 2006 revenue was $221.9 million, compared with $221.4 million in the comparable 2005 quarter. Revenue at its local Tropicana property, $39.6 million, was off 5% from the prior year. A company executive told investors on a conference call Wednesday afternoon that the drop was due primarily to uncertainty regarding the possible redevelopment of the property. Aztar for a time stopped taking room reservations beyond April 20 because of Pinnacle’s interest in redeveloping the property.

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