By Staff   Sat, Jan 21, 2012

Future of Atlantis now unknown as debt begins to crush

The deal to place the Atlantis resort in the hands of creditor Brookfield Asset Management has been scuttled following a court ruling that threw the action into doubt.

The Wall Street Journal reported that Brookfield canceled the move when other creditors got a Delaware chancery court to grant a temporary restraining order, blocking Brookfield from closing the deal announced in November

Brookfield’s original offer followed Kerzner International Holding’s default on a $2.5 billion loan, according to the Bahamas Tribune. The Delaware lawsuit alleges that after extending the loan’s maturity three times from September 2008 to September 2011, Kerzner International and advisers were unable to restructure the credit facility.

Judge Parsons wrote in his ruling, “If the proposed transaction is allowed to close, plaintiffs stand to lose the benefit of contractually negotiated rights related to their priority relative to other participants, as well as contractual rights related to their relationship with the borrower.”

The ruling called for hearing to be held January 27 but Brookfield decided to pull the plug instead.

The original deal called for Brookfield to swap its $175 million of Kerzner International Holdings debt for controlling equity in Atlantis and the neighboring One & Only Ocean Club resort, plus a 50 percent stake in the One & Only Palmilla resort near Los Cabos, Mexico.

The suit was brought by creditors Trilogy Portfolio Co. LLC, Canyon Value Realization Fund LP, Canyon Value Realization Master Fund LP and Canyon Balanced Master Fund Ltd., who claimed that Brookfield would not have the same responsibilities towards them as Kerzner International in the event of natural or financial disaster. The four combined are on the hook for only $112 million but are somewhat senior to Brookfield.

The current difficulties for Kerzner International stem from the company’s default on a $2.5 billion loan agreement in May 2011. According to the Bahamas Tribune, company auditors were not able to provide the firm with “unqualified” financial statements for Atlantis and the One & Only Club for 2010.

But the problem traces its roots back to 2006 and Kerzner International’s $3.8 billion leveraged buyout, which took the company private. The company borrowed $3.4 million for the deal, confident that Atlantis would see continued growth.

Then came the credit crisis. According to the lawsuit, Kerzner International net cash flow dropped by $30 million between 2008 and 2009. Occupancy at Atlantis fell from an average 80.3 percent to 61 percent.

Kerzner International and the properties Atlantis and One & Only Ocean Club are said to be still profitable but unable to generate enough income to service the $2.5 billion debt.

This latest development in the ongoing Atlantis crisis has carried over to the Bahamas political world.

Franklyn Wilson, chairman of Arawak Homes and Sunshine Group, said that comments by Prime Minister Hubert Ingraham hurt Kerzner International’s efforts to refinance the debt. At issue are statements about the prime minister made about the Cable Beach / Baha Mar project in relation to Atlantis, saying that the two would split the high-end tourism market.

When the government then approved the Baha Mar project, Wilson believes, Kerzner International’s financial projections regarding Atlantis were no longer valid in the eyes of creditors.

Wilson told the Tribune, “The prime minister, at a certain point in time, when it was clear Kerzner was involved in a serious effort to refinance his loan, made a statement that both those projects, Atlantis and Baha Mar, cannot co-exist.

“We now know that at the time he made that statement, Kerzner was involved in efforts to refinance. It would be reasonable to assume all financiers in conversation with Kerzner would be aware of the statements by the Prime Minister.”

Opposition leader Perry Christie was quick to jump on the anti-Ingraham bandwagon, to which the prime minister responded by attacking the circumstances of the original loan.

Reminding critics that the current debt situation originated during a Christie-led government, Ingraham said, “Kerzner International now has a loan for $2.3 billion and the security for the loan is the properties on Paradise Island. Much of the loan money was spent outside the Bahamas. It was inappropriate and wrong for the government of the Bahamas to agree for the properties on Paradise Island to be put up as a security for a loan where the proceeds of the loan were going to be spent outside the Bahamas.

“That was a big, big mistake.”

At Kerzner International, 76-year-old Sol Kerzner announced on January 3 that he would step down as CEO effective immediately but remain as chairman. South Africa’s BusinesLive website said that the official announcement had been released only recently.

The former regional president for Europe, Africa and the Middle East, Alan Leibman, who joined the group in 1994, has assumed the position of CEO.

Kerzner vacated the CEO spot once before in 2003, making way for his son, Howard “Butch” Kerzner, but took up the post again after his son died in a helicopter crash in the Dominican Republic in October 2006.

Back at Atlantis, despite the uncertainty, business is expected to continue as usual.

Craig Gomez, partner and accountant at Baker Tilly Gomez, told Tribune Business that he does not think employment levels at Paradise Island would be affected by the recent turbulence—good news for the 7,500-8,000 workers if true.

“I believe there’s a mandate from the remaining creditors to maintain certain revenue levels and standards that are quite lofty, and they will need human resources and human capital to hit them,” Gomez said.

Gomez said that the main questions were whether creditors returned to the original relationship and terms with Kerzner International following collapse of the Brookfield deal.

The Bahamas does not have Chapter 11-style bankruptcy laws. Raymond Winder, the Bahamas' chief World Trade Organization negotiator, said, “The reason why Kerzner, Atlantis finds itself in this situation is that we in the Bahamas don't have legislation that allows companies in situations like Kerzner’s to go through restructuring while continuing operations.”

It now remains to be seen what happens next.

“It’s a fight among creditors,” said Gomez.

Sat, Jan 21, 2012

Kent Young, the former global marketing vice president for Aristocrat Technologies and general manager of Aruze Gaming, has launched a new slot content company, Spin Games. 

Based in Reno, Spin Games will develop “highly innovative secondary bonus products, premium slot content, and captivating concepts, complemented by an enviable intellectual property portfolio,” according to a press release.

“I’m delighted to be back in the game with innovative content, that offers our customers an unmatched opportunity, an exceptional design team, and a comprehensive intellectual property portfolio,” Young said. “I believe we’ve created something that in this dynamic environment is compelling for the manufacturer, operator and end user. We’re a very good fit for today’s marketplace.”

Spin Games is developing products in three key areas. The first, secondary bonusing applications, will utilize multiple platforms such as server-based technology, jackpot controllers, overlay technology and online bonusing applications. Secondly, the company will develop what it calls “high-end” slot content, focusing on the premium slot category. And thirdly, Young says the company will produce patented “out-of-the-box” concepts never before seen.

“I think we’re at the front of the pack in terms of original concepts,” Young said. “We believe content is king, and content provides the real value. We’re in this business to drive returns for our stakeholders.”

Spin Games is Young’s second content supplier. His first, True Blue Gaming, was acquired by Aruze when Young was named general manager in 2008.

By Staff   Sun, Jan 22, 2012

Rick Mazer has spent most of his casino career in the Midwest after starting out as an original dealer at Caesars Atlantic City. He was brought to Las Vegas after running the Caesars Indiana properties and was given responsibilities for the mid-Strip properties. Now, all the Las Vegas action will be happening in this region. Caesars’ Linq project will “link” Bill’s and the Flamingo with Harrah's Las Vegas, Imperial Palace and O'Sheas via a very unique mall that will include innovative retail, restaurants, bars and other entertainment attractions. At the very end of the Linq will be one of the world’s largest observation wheels, giving Las Vegas visitors a breathtaking view of not only the pulsating lights of the Strip but also the majestic mountains that ring the valley. Mazer spoke with Global Gaming Business Publisher Roger Gros at his offices at the Flamingo in December.

Sat, Jan 21, 2012

Estonia-based gaming operator Olympic Entertainment Group has named Madis Jääger to be its new CEO. 

Jääger replaces Indrek Jürgenson, who is now in charge of developing and managing the group’s online casino, Olympic-Online.com.

Meelis Pielberg, who has been with the group since 1996, is responsible for managing land-based casino operations.

Armin Karu, founder of OEG and chairman of the board, said, “We are bringing more power and experience to the management board to better cover our core business areas.

“We have one area of activity—casino entertainment—but our online casino operations have now developed to the point where we consider it necessary to add more focus to the top management level.”

Jääger said that no major changes were being planned, saying, “The objective is to become more efficient in our current markets, bring more value to our shareholders and increase operating volumes of the online casino business.”

OEG has more than 2,200 employees and is the largest provider of casino entertainment in the region.

Sat, Jan 21, 2012

Slot and systems manufacturer Aristocrat Technologies has named well-known casino systems expert Jeffrey J. Connors as senior director of national accounts and business development. Connors brings more than 20 years of casino management system experience to the company.

Connors is returning to Aristocrat after a seven-year term as vice president of regional sales for Bally Technologies, where he managed that company’s corporate accounts and ran the Western U.S. sales territory. He first came to Aristocrat from Casino Data Systems when Aristocrat purchased that firm and its Oasis casino management system in 2002.

In his new position at Aristocrat, Connors will have responsibility for new business development, managing national systems accounts, and increasing the systems footprint across North America.

“We are very excited to welcome Jeff back to the Aristocrat family,” said Kelly Shaw, Aristocrat’s vice president of system sales and marketing. “He was instrumental in growing our Oasis systems business, first with Casino Data Systems and then with Aristocrat until 2003, and we are confident that he will make significant contributions to our company and to our customers.”

“I am thrilled to join Seamus McGill, Kelly and the entire Aristocrat team,” said Connors. “Speaking from decades of experience, I can say the new bonusing features, ease of use, and stability of the Oasis 360 casino management system is simply the best on the market, and I am proud to represent the entire Aristocrat portfolio of products to our partners throughout the Americas.”

Sat, Jan 21, 2012

London-based gaming supplier and operator Inspired Gaming Group announced the appointment of veteran sales executives Ron Babini and Jurate Bitinaite to its global sales team. 

Babini joins Inspired following 13 years at IGT Europe, where he progressed from sales executive to sales manager, a position he has held the past six years. At Inspired, he will serve as casino sales director for Europe, focused on distributing Inspired’s server-based electronic roulette and slots products across Europe. (Paul Bursnell remains sales director for the U.K. and Asia.)

Bitinaite joins Inspired as corporate partnership manager for the Americas. She has nearly a decade of operator and supplier experience in the gaming industry, most recently as a regional sales manager for Bally Technologies, covering product sales in 17 countries and introducing many products to new markets, while acquiring strategic relationships for further market penetration. She was named Bally’s Top European Representative and Best International Sales Person in 2010.

Bitinaite will be responsible for working with Inspired’s distributors on the successful introduction of the company’s new server-based casino products to the Americas. A primary part of this role is managing the relationship with Inspired’s distribution partners in these regions.

“We’re delighted to have two well respected sales people in our industry now working at Inspired,” said Lee Gregory, managing director of the Casino and Bingo division at Inspired. “It’s a testament to how exciting our company is at the moment that we’re attracting superstar employees. Inspired is known for being an exciting and innovative company, but has yet to reach all its potential audience in regions such as Eastern Europe, the U.S. and South America. I have no doubt that Ron and Jurate’s hard work and deep knowledge of the industry will result in some exciting new customer relationships for Inspired and great success for the casino product range they represent.”

Sat, Jan 21, 2012

Leading software supplier and industry consultant NEWave announced and expansion of its Professional Services Division with an affiliation it has forged with Jordan Gaming Consulting Group to offer database management and slot management consultation to NEWave’s extensive and growing client base.

Jordan Gaming Consulting Group is a full-service advisory firm with a stable of experts who have extensive experience in the gaming and hospitality industries. The group has numerous published articles to its credit, holds numerous patents and counts some of the gaming industry’s top companies among its clients.

“When we formed the Professional Services Division of NEWave, we had a vision to assemble the best possible in-house team, as well as establish a network of experts that would extend our capabilities and help our clients’ businesses function in top form,” said Claudia Winkler, NEWave’s senior vice president of professional services. “This new relationship with Jordan Gaming Consulting Group fits that vision perfectly, and we are thrilled to present their expertise to our clients.”

Jordan Gaming Consulting Group Principal Jeff Jordan added, “We are delighted to be working with the experts at NEWave and to extend the capabilities of their Professional Services Division. NEWave is recognized industry-wide as leaders in technology development and management, and we are confident that our team will be a valuable, knowledgeable resource to their clients.”

Jordan Gaming Consulting Group will specifically consult with NEWave’s clients on database management and slot management. Jordon’s analysis will examine gambling activity, identify untapped and underperforming segments and players, close the performance gap, and design unique marketing campaigns tailored to each casino and to each customer.
“The simple truth in business today is that data is money, and this new area of our Professional Services Division will help casinos to maximize the return on their data investment,” Winkler said.

In a separate announcement, NEWave said it is notifying its clients that the deadline to meet the new FinCEN reporting requirements has been extended to March 31.

NEWave is in the process of finalizing software updates to its myCompliance Suite that will ensure casinos are compliant with the new reporting process. That product is expected to be released in Q1 2012, well in advance of the impending FinCEN changes, giving casinos time to get ahead of the new requirements.

“The FinCEN changes are sweeping, and therefore, the deadline extension is a welcome relief to casino operators everywhere,” said NEWave COO Tom Bechtel. “Because they must either increase staffing levels or install software that will complete and file the forms automatically, casinos should not take the extension as a time to relax—the prep work is still significant, and now is the time to prepare.”

Sat, Jan 21, 2012

The purchase of social gaming company Double Down Interactive by leading slot manufacturer International Game Technology—announced two weeks ago at a price of $500 million to be paid over three years—is raising major concerns among some analysts. 

Union Gaming Group principal Bill Lerner warned last week that the purchase of Double Down—which developed and feeds content to the DoubleDown Casino on Facebook, the world’s largest social network—is alienating the operators who buy their games for brick-and-mortar casinos.

Lerner wrote in a research note that at least three major casino operators are “irritated” that IGT will be competing with the content they buy from the manufacturer, and that they will enter the internet gaming market themselves to compete with IGT should online gaming become legal.

“We believe that three major casino operators have taken exception to IGT's acquisition of Double Down,” Lerner wrote in the note to investors. “They suggest that they will react negatively especially if IGT pushes around content that they cannot have access to. They also are concerned about how IGT will treat poker once they launch it and when it is legalized. They highlight that IGT is going directly to the end user, which contrasts with IGT’s view that they are B2B and not B2C. We believe this could manifest in retaliatory purchasing behavior.”

One of those potentially retaliating could be MGM Resorts International, which recently bought Playtika, the developer of Facebook’s Slotomania game, the second-largest social-gaming application on the giant network.

Lerner advised investors to sell IGT shares and to replace them with shares of Bally Technologies, Shuffle Master and other supplier stocks.

IGT officials insisted the Double Down acquisition is meant to put the manufacturer’s products in front of social media users so they play them in brick-and-mortar casinos and future i-gaming sites—not to compete with operators. “IGT has no plans to operate an online casino in Nevada and compete with our customers,” said Staci Alonso, IGT’s vice president of marketing, in an interview with the Las Vegas Review-Journal.

Janney Montgomery Scott gaming analyst Brian McGill took this same view of the purchase, telling the newspaper, “The one major positive would be if online poker is legalized, it now has a partner in Facebook and it could benefit from this relationship. In the meantime, it is expected that virtual gambling will continue to grow and IGT will benefit from now putting its titles on the site that can be available for virtual gaming.”

Sat, Jan 21, 2012

Slot manufacturer Multimedia Games announced it has extended 1,709 unit placements, or 85 percent of 2,009 units currently installed on a revenue sharing basis at WinStar World and Riverwind casinos, both operated by the Chickasaw Nation of Oklahoma, for an additional 3.5 years. 

The additional contract time occurs after the end dates of the current placement agreements in the second half of fiscal 2013. The remaining 300 units will be removed over a two-year period beginning April 2014.

Multimedia also extended 70 units of a total of 115 units currently installed at the Chickasaw Nation’s Black Gold Casino for an additional 3.5 years. MGAM is paying for the retention of the games. as they said they will pay the tribe unit placement fees of $13.2 million in the current quarter.

Approximately 90 percent of the current units at Chickasaw Nation facilities are now expected to remain installed through at least September 2015.

Sat, Jan 21, 2012

Germany’s Dallmeier Electronic GmbH announced that it has installed the largest closed-circuit TV surveillance system yet to be seen in a U.K. casino at London’s new Aspers Westfield Stratford City casino. 

Dallmeier’s SeMSy surveillance system, installed in partnership with Grace James Security, is one of the most user-friendly CCTV systems on the market, according to Aspers Group Security and Surveillance Manager David Livermore, who praised Dallmeier as “a company that really knows casinos.”

SeMSy III is a high-performance and future-proof video management system boasting high reliability, achieved through an elaborate redundancy concept. It offers a comprehensive range of functions, including the display of live images, various search options within the footage, the control of PTZ cameras and an easy archiving of relevant sequences.

The cameras’ pictures are recorded on several DMX 1600 Smatrix units. The Smatrix is a hybrid Video IP appliance with integrated storage system, featuring a space-saving design and low power consumption and thermal output. It is highly recommended for applications requiring high-speed recording, expanded storage capacity and low power consumption while ensuring maximum security, according to the company.

Sat, Jan 21, 2012

Analysts have chimed in on the outlook for slot manufacturing firms in 2012, and for the most part, the outlook is positive. 

The Las Vegas Review-Journal gathered comments from several gaming analysts in comments to their investors on how slot suppliers may fare this year, and the opinions painted a picture that’s rosier than it has been in years. Analysts cite new casinos opening in Kansas, Ohio and Maryland as one catalyst, and say that slot replacements are already occurring at a quickened pace.

“We think 2012 should be a good year for suppliers," Macquarie Securities gaming analyst Chad Beynon told investors recently, according to the newspaper. “Following a disappointing year for the slot vendors in which all underperformed, we believe 2012 should be a much better year for the group.”

“Calendar 2012 is shaping up to be the best year for the pipeline that the industry has seen since 2009,” said Brian McGill, gaming analyst for Janney Montgomery Scott. “Either Illinois and/or Ohio will provide a major boost to the pipeline, or the pipeline will revert back to its anemic 2011 levels.” Illinois bar owners are expected to soon begin placing new machines under the 2009 Video Lottery Act, which recently survived a court challenge. Estimates predict as many as 30,000 or more new units could be placed across the state.

Joel Simkins, gaming analyst for Credit Suisse, said International Game Technology stands to gain the most from new sales. “IGT remains the most attractive supplier given its improved content pipeline, opportunity for continued market share growth on a domestic and international basis, strong balance sheet, history of returning capital to shareholders, and option value for its online gaming business,” Simkins wrote in an investor note.