HORACE LANGFORD JR. / PVT Terrible's Town Slot Club Manager Margaret Haines, General Manager Pat Michel and Terrible's Lakeside Casino Slot Club Manager Jane Cote display birthday cakes as Herbst Gaming celebrated the 10th anniversary of the opening of Terrible's Lakeside Casino Tuesday. Advertisement

Operations at Terrible's Town and Terrible's Lakeside Casino will continue as usual, but the casinos will soon be owned by lending institutions if the latest financial restructuring plan for Herbst Gaming is approved by the U.S. Bankruptcy Court.

Herbst Gaming Tuesday announced an agreement on restructuring $847 million in debt that calls for splitting the company into a casino business, owned 100 percent by the lenders, and the slot route operation, which will be owned 90 percent by the Herbst family, according to an agreement filed with the U.S. Securities and Exchange Commission Monday.

Herbst Gaming Inc., in a prepared statement, announced the company had reached an agreement with lenders holding approximately 68 percent of the loans under the second amended credit agreement filed Jan. 3, 2007, as part of a financial restructuring plan.

The company states:

"All operations of the company will continue under current management on a business as usual basis throughout the restructuring process. The proposed restructuring plan allows for continued timely payments to vendors under normal trade terms ... without interruption."

Pat Michel, general manager of Terrible's Town and Terrible's Lakeside Casino, referred all inquiries to the Los Angeles public relations firm of Sitrick and Co.

Herbst Gaming General Counsel Sean Higgins couldn't be reached for comment. But Higgins told the Las Vegas Review-Journal he expected the restructuring plan to be filed with the U.S. Bankruptcy Court March 23.

"Our problem is a balance sheet issue -- we have more debt than our operations can support. This agreement with our bank lenders is designed to resolve our balance sheet problem by restructuring our debt," Troy Herbst, Herbst Gaming chief executive officer, said in the prepared statement.

Herbst Gaming opened a casino in Las Vegas in December 2000, the company also owns casinos in Henderson and Searchlight. In January 2007, Herbst Gaming spent $140 million to acquire casinos in northern Nevada in Reno, Sparks, Verdi and Dayton. Three months later the Herbst family bought three casinos in Primm, on the California state line, for $394 million.

Passage of anti-smoking legislation in Nevada in November 2006 was blamed for a drop in slot route revenues. The impact of high gas prices affected the Primm casinos, while the plunge in the economy contributed to the financial woes of numerous gaming companies that have considered debt restructuring plans.

The company expects the Chapter 11 case will move through the bankruptcy court in an expeditious manner. The plan will also be subject to approval by gaming regulators in Nevada, Missouri and Iowa, the company states.

Herbst Gaming now owns 12 casinos in Nevada, two in Missouri and one in Iowa, employing 5,400 people. The slot route business includes 6,800 gaming machines in grocery stores, drug stores, convenience stores, bars and restaurants throughout Nevada.

"This agreement is the best solution possible. The businesses were cash flow positive but they simply carry too much debt. This is a solution that allows the company to address that issue while preserving the jobs of their employees," Maya Pogoda, a spokeswoman for the PR firm, said.

She said approximately 290 employees work at the two Pahrump casinos.

"I'm just glad that somebody's taking it over and people's jobs will continue vs. them closing it down and then looking for someone to take it over," said Al Balloqui, the town of Pahrump community business development services manager. "At least there will be some continuing of the facilities operating. That place still stays busy, it's as much of a locals spot as a visitors destination resort. It serves the community."

He referred to the convenience store which serves residents in the south end. The RV park attracts snowbirds to the area.

Ironically, the announcement comes days after the 10th anniversary of the opening of Terrible's Lakeside Casino.

Terrible's Town Casino opened its doors June 25, 1996, but the Herbst family has had a presence in Pahrump since the 1970s, beginning with the opening of the Terrible's Country Store at Highway 160 and Calvada Boulevard.

Terrible's Lakeside Casino opened at the site of the former Double Eagle Casino March 5, 1999, which was remodeled with a fireplace and a faux log cabin interior. A 6.5-acre lake was constructed in the back around a recreational vehicle park that has won awards in RV travel magazines.

As recently as 2007 the company talked about plans to build a Brendan movie theater complex onto Terrible's Town Casino.

The Herbst family discontinued its Terrible's Town 250 off-road race last year and a popular summer outdoor concert series at the Terrible's Lakeside Amphitheater held in 2007 that attracted stars like Juice Newton and B.J. Thomas.

Cafes at the two casinos, formerly open 24 hours, started to close at night.

Herbst offered more reassurances in his concluding statement of the press release.

"My brothers and I want to say how pleased we are that we are able to resolve the company's financial issues in a way that helps to protect the jobs of our valued employees, ensures that all our loyal vendors will be paid fully and that all our casinos and route operations will continue to function on a business as usual basis through the restructuring process.

"Neither our customers nor vendors should experience any impact from our planned financial restructuring and change of ownership of the casino businesses."