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D on H. Barden is not afraid to let it ride. Having recently acquired three Fitzgeralds casinos for $149 million — one of them in Las Vegas — Barden touts himself as the first African American to wholly own a casino in gambling’s capital. The deal also substantially increases revenues of Barden Companies Inc. (No. 25 on the 2001 BE INDUSTRIAL/SERVICE 100 list) from $136.45 million in 2000 to a projected more than $300 million.
Last March, Barden placed the bid at the U.S. Bankruptcy Court in Reno, Nevada. The prize: the Fitzgeralds Casino in downtown Las Vegas, as well as casinos in Tunica, Mississippi, and Black Hawk, Colorado. Barden says the properties were profitable, but the prior owners were dragged into insolvency due to the inability to make interest payments on its bond debt. Fitzgeralds voluntarily filed for Chapter 11 bankruptcy in U.S. District Court in Nevada on December 5, 2000, as part of the deal.
Barden had signed an agreement with Fitzgeralds to buy the properties, but it was the bankruptcy judge’s prerogative to approve the deal. “We had to make sure that the details were covered very thoroughly and to make sure that no one overbid us,” Barden recalls.
To fund the acquisition and its transition costs, Barden spent some of his own money — $14 million in cash. He also raised $150 million in a high-yield bond offering after a 10-day whirlwind tour where he visited 40 institutional investors in 12 cities. He used three key selling points to open investors’ wallets: In the Chicago market, Majestic Star casino has a successful track record competing with national casino firms; the three Fitzgeralds casinos are profitable and have excellent growth prospects; and the casinos are being bought at a discount at four and a half times cash flow.
The Fitzgeralds properties, Irish-themed casinos replete with leprechauns, four-leaf clovers, and decorations of rainbows leading to pots of gold, have roughly 2,800 employees. They add 2,900 slot machines to Barden’s 1,434 at the Majestic Star Casino in Gary, Indiana. They bring another 61 table games to join the 49 on the Majestic riverboat casino, and adds 1,100 hotel rooms.
Now that Don Barden has got his foot in the door downtown, will he refocus his plans on the fabled Las Vegas strip? “Majestic’s immediate goal is to do a good job with what they already have, but it will position itself to capitalize on attractive situations developing in the future,” Barden says. “We’re in three of the top-five gaming markets in the country, and the feeling is ecstatic.” With 35.85 million visitors to Las Vegas gambling away $31.46 billion in 2000, if Barden can secure even a small piece of this pie, it’ll be a win for the house.