Black Gaming evaluating options to increase liquidity as EBITDA expected to decline further

By Jennifer Lanning Drey

Portland, Ore., Aug. 21 - Black Gaming, LLC is evaluating all options for increasing liquidity in 2009 while at the same time is implementing further cost-cutting initiatives and working to grow revenues, Randy Black, chief executive officer of Black Gaming, said Thursday during the company's second-quarter earnings conference call.

Black Gaming believes it has ample liquidity to meet its operational, debt service and capital expenditure needs for the balance of 2008 but may require additional funding in 2009, he said.

"We're still focused on our liquidity, cost discipline and debt service needs, and while we have some significant hurdles facing our organization, we're not leaving things to chance," Black said.

The CEO said he could not provide more detail on the type of options being considered to provide additional capital in 2009.

The company's current sources of liquidity are primarily cash flow from operations and its credit facility with Wells Fargo Foothill. At June 30, the company had $8.1 million of cash and cash equivalents and $9.0 million available under the credit facility.

The cash balance showed a decline from $9.5 million at Dec. 31, 2007, according to the company's 10-Q filed with the Securities and Exchange Commission.

Cash provided by operating activities in the first six months of 2008 declined to $3.5 million, compared to $7.7 million in the same period of 2007, primarily due to a $3.2 million decrease in operating income and changes in operating assets and liabilities of $1.6 million.

Revenues fell to $21.25 million in the second quarter, down from $27.18 million in the comparable period in 2007.

"The year continues to be very challenging. Rising fuel and the slowing economy are putting us in a defensive position, and at some point, you just can't cut your way to profitability," Black said.

EBITDA falls 34%

The company has tried to keep pace with its declining revenues by reducing operating expenses; however, lower consumer spending continues to decrease EBITDA, Black said Friday.

Black Gaming's second-quarter EBITDA fell to $4.5 million from $6.8 million in the prior-year quarter, Sean McKay, chief accounting officer of Black Gaming, said during the call.

"We continue to experience overall declines in our EBITDA, and we expect to experience continued softness through the remainder of 2008, which may present further difficulties in meeting our debt service, operational and capex needs going forward," he said.

Black Gaming is a Las Vegas-based hotel casino operator.

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