2nd Santa Fe subsidiary files for bankruptcy

Another Santa Fe Gaming Corp. subsidiary has filed for bankruptcy court protection from creditors.

Santa Fe said today that Pioneer Hotel Inc., the Santa Fe subsidiary that operates the Pioneer hotel-casino in Laughlin, filed for Chapter 11 bankruptcy court protection in U.S. Bankruptcy Court in Las Vegas. Assets and liabilities were not available.

A separate Santa Fe subsidiary, Pioneer Finance Corp., filed for bankruptcy in February, listing assets and liabilities of $55 million. Pioneer Finance was formed in 1988 solely to finance the purchase of the Pioneer hotel-casino by a Santa Fe predecessor corporation.

Pioneer Finance floated $120 million in bonds in 1988. But last December, Santa Fe missed a $60 million balloon payment on those bonds. The company got 75 percent of the bondholders to agree to exchange those bonds for new bonds due in 2006.

But those terms were unacceptable to a minority of the bondholders, led by New York investment firm Hudson Bay L.P. and its general partner, David Lesser. Hudson Bay and other creditors filed petitions attempting to force both Santa Fe Gaming and Pioneer Finance into bankruptcy. In February, Santa Fe voluntarily placed Pioneer Finance into bankruptcy. In a bankruptcy court hearing, Santa Fe defeated the Hudson Bay attempt to place Santa Fe Gaming in bankruptcy.

The Pioneer hotel-casino bankruptcy filing is just part of the overall Pioneer Finance restructuring plan, said Santa Fe spokesman Andrew Klebanow.

"Every vendor of Pioneer Hotel Inc. goods and services was paid in full in advance of this filing," said Klebanow.

Separately, Santa Fe said its stock is now being traded over the counter under the ticker symbols SGMG and SGMGP. A decline in the value of Sante Fe assets forced the stock's delisting from the American Stock Exchange.

In addition to the Pioneer hotel-casino, Santa Fe owns the Santa Fe hotel-casino in northwest Las Vegas, and development land in Henderson and on the Strip.

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