GAMING FIRMS HAVE CACHE FOR LOCAL PROJECTS

Lady Luck Gaming Corp. and Boyd Gaming Corp. have available $374 million between them to earmark for new gambling developments outside Las Vegas, Nev.

Both companies are competing for a gaming license in Cape Girardeau and apparently are well capable of making a significant investment in the city.

Boyd Gaming has earmarked $52 million of $189 million available for new gaming projects for a proposed riverboat in Cape Girardeau.

And Lady Luck has a $185 million cache available for new projects in Mississippi and Missouri, including its $58 million proposal for Cape Girardeau.

That's good news for city officials, who will require financial assurances from either company that their projects will be completed as proposed.

Even if there are cost overruns with some of their other developments, representatives of both companies said there's ample financing to complete the Cape Girardeau proposals.

In the Boyd's case, the company has projects pending in Tunica County and Philadelphia, Miss., Kansas City and Kenner, La.. Those projects will cost more than $200 million. Boyd Gaming also is building a $90 million expansion of Sam's Town in Las Vegas.

But Ellis Landau, chief financial officer for Boyd Gaming, said the company has bank credit lines available to finance its Las Vegas expansions.

"We could move some of that $189 million to our projects in Las Vegas, but we don't have to," said Landau.

He said Boyd Gaming is able to use proceeds from its six Nevada casinos for projects in emerging gaming markets like Cape Girardeau.

"We're one company, and all the properties can support one another," Landau said. "If more funds were needed for another project, there's the opportunity for the cash to move from Tunica or Las Vegas, for example, to a project in Cape Girardeau.

"Also, once Tunica begins operating, we would be willing to use the assets from company A to support company B."

As one big, corporate group, Boyd Gaming is able to use the full assets of the company for all its projects, even small riverboat casinos in Mississippi and Missouri, Landau said.

"Our name's on it, and our company's support is behind any project we're involved with," he added.

Landau said the six Nevada casinos generated more than $100 million "cash flow" in the past 12 months.

Unlike Boyd Gaming, Lady Luck Gaming is a separate company from Lady Luck Resort and Casino in Las Vegas.

The president and primary stock holder in Lady Luck Gaming operates the Las Vegas property, but only management, marketing and non-cash assets are shared.

However, proceeds can be transferred between Lady Luck's properties outside Missouri, which include Lady Luck Natchez, Lady Luck Biloxi and Lady Luck Tunica in Mississippi, and Lady Luck Central City in Colorado.

Other projects that likely will be operating by late 1994 include riverboats in Gulfport, Vicksburg and Coahoma County, Miss., and a riverboat in Kimmswick, Mo.

Aside from the cash flow from the operating riverboats, the company recently closed on placement of $185 million in first mortgage notes.

The notes were assigned the rating of B-plus by Standard and Poor's Ratings Group.

"That's the best rating anyone's gotten in the emerging gaming markets," said Michael Hlavsa, chief financial officer for Lady Luck Gaming. "That's essentially a measure of the credit-worthiness of the company.

"The Boyd Group, with all of their bricks and mortar in Las Vegas and their long history, also has a B-plus rating."

Hlavsa said the financing has left about $120 million for the four planned projects in 1994 and "one other project."

"The Cape Girardeau project could either be funded with the money in that financing, or we could swap out one of the Mississippi projects," Hlavsa said.

As with Boyd's properties, proceeds from Lady Luck's operating riverboat casinos also can be used for new projects.

Lady Luck had added a twist to its financing plans in Cape Girardeau by trying to secure local investors.

Hlavsa said the company first gave local people the opportunity to invest in the company while Lady Luck was competing for the city's endorsement in Kimmswick.

"We offered local investors the opportunity to own up to 40 percent of the local subsidiary," he said. "In Cape, we also are talking to people about having an equity interest in the company."

At least two people in Cape Girardeau confirmed they were approached by Lady Luck representatives and given the opportunity to make a large cash investment in the Lady Luck project.

"What that does is reinforce our commitment to the local community," said Hlavsa. "We buy local, we hire local, and this shows that we have local investment."

He said no one locally has yet agreed to make the investment, despite the opportunity for remarkable returns.

"If a local investor were to give $300,000 or $500,000, they would be paid back within 24 months," Hlavsa said. "But then they would continue to get that original investment back annually forever -- as long as the boat operates.

"In the gaming industry, there's a very high rate of return. Obviously, it's far more beneficial to us financially not to do it, and to give that up, there has to be a reason for it."

Hlavsa said Lady Luck seeks local investors to give the project a "local flavor," and provides a "local partnership."

"It's beneficial to them because of the return on their investment," he added. "We have one of the best returns on investments in the industry."