Fitzgeralds posts a loss, doesn't foresee layoffs

Fitzgeralds Gaming Corp. reported a net loss of $4.6 million for the second quarter, but said its current financial difficulties won't result in layoffs or cutbacks at its properties.

The Las Vegas casino operator, whose stock is not publicly traded, recorded a profit of $2.2 million in the year-ago quarter. Operating revenues declined 9.4 percent to $52.3 million.

Fitzgeralds recorded the quarterly profit a year ago primarily because of an $8 million payment it received with the termination of a management agreement last year.

The company owns the Fitzgeralds hotel-casino in downtown Las Vegas, as well as casinos in Reno, Tunica, Miss., and Black Hawk, Colo.

Fitzgeralds continues to be in default on more than $200 million in bonds, and warned last month that it was likely to file for bankruptcy as part of a plan to restructure that debt. The company offered no further details on that restructuring plan, stating only that the bondholders had yet to take any action against the company.

If at least 25 percent of the bondholders called for it, the bonds could become immediately due and payable. This hasn't occurred, but if it did, "the company would not have the resources available to repay such indebtedness." Fitzgeralds didn't make its last payment of $12.5 million on the bonds, due June 15.

By stopping those payments, "the company believes that its liquidity and capital resources will be sufficient to maintain all of its normal operations at current levels during the restructuring period and does not anticipate any adverse impact on its operations, customers or employees," Fitzgeralds said in its quarterly earnings statement.

In fact, the company has boosted its payroll by more than 12 percent in Mississippi and Colorado to keep up with growing competition in those markets.

The company added that cash for regular operations isn't a problem, but that Fitzgeralds can't expand and upgrade its current properties to keep up with competition while it has so much debt on the books.

Fitzgeralds has liabilities of $242.2 million, and assets of $209.2 million. It now has $22.5 million in cash, up from $13 million at year-end 1998.

The company's Colorado casino was its most profitable in the second quarter, recording income of $1.86 million on operating revenues of $9.47 million. Of its four major casinos, only the downtown Las Vegas property lost money, with a loss of $220,000 on revenues of $13 million. The Las Vegas Fitzgeralds lost $258,000 in the year-ago quarter.

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