Tuesday, Nov. 23, 1999 | 11:16 a.m.
Herbst Oil Co. has agreed to merge 14 of its Terrible Herbst car washes and gas stations in the Las Vegas area with a Florida company trying to create a national network of car washes.
Separately, the Herbst family plans to close next week on its purchase of the closed Continental hotel-casino.
The gas station merger will immediately make Car Spa Inc. of Fort Lauderdale, Fla., a major player in the Las Vegas market, and will give the Herbst family a significant stake in its operations. Currently, Car Spa operates just one center, in Jacksonville, Fla., and has another seven centers under construction.
"We saw a company that was growing, that was going to have a significant impact on several markets across the country," said Sean Higgins, general counsel for Herbst Oil. "We saw a way to get out into other markets, and increase our number of car washes.
"These are two groups of people with very common business philosophies."
The centers affected by the merger are in the Las Vegas Valley except for one in Bullhead City, Ariz.
Higgins said markets targeted for expansion by Car Spa include South Florida, Atlanta, Dallas, Houston and Southern California. The merger with Car Spa will allow Herbst to diversify its portfolio into other markets, Higgins said.
Car Spa was attracted by the foothold Herbst held in Las Vegas, one of its target markets.
"We had three or four other sites we were looking at prior to this merger," said Kim Nothard, Car Spa's vice president of marketing. "We're not finished in Vegas with this. It's a great start, but we still have plans.
"(Herbst's) real estate strategy is to be on the best corners of every market. Not many car wash companies follow that strategy at all. Where they're at is exactly where we're looking."
The merger agreement, signed Friday, only affects those Terrible Herbst operations that operate car washes, lube centers, gas stations and convenience stores in a single property. Herbst's standalone gas stations will remain independent.
Because both companies are privately held, further terms of the agreement were not disclosed.
Northard said Car Spa had acquired options on four other parcels of land in the Las Vegas Valley, and is now trying to get permits to begin building centers on those parcels. The company expects to begin construction on these centers by February.
"As of now, they will stay Terrible Herbst, because it's got name recognition ... we've been in operation here for 45 years," Higgins said. "That probably won't be the case in other sites. The Car Spa name will be used in those sites."
Meanwhile, the Herbst family is on the verge of closing on the purchase of the defunct Continental hotel-casino at Flamingo and Paradise roads. The 400-room property closed on March 31 after falling into bankruptcy.
Higgins said the family plans to close on the property by Nov. 30. Demolition has begun on the interior of the building, but the new property will use the Continental's old shell. The property is being acquired by Edward, Timothy and Troy Herbst, sons of company patriarch Jerry Herbst.
Jerry Herbst has a major stake in Coast Resorts Inc., which owns the Gold Coast, Barbary Coast and Orleans hotel-casinos. His sons are owners and operators of Terrible's Town and Terrible's Lakeside hotel-casinos in Pahrump.
The Herbsts are keeping the Continental property's new theme under wraps, though Higgins said it should reopen by the second quarter of 2000. Once reopened, it will feature about 400 rooms, a 40,000-square-foot casino, and about 700 to 800 gaming devices.
"It's a good entree into the Las Vegas market for us," Higgins said. "You can't get into this market inexpensively. It's a lot of money, but we think it's a great opportunity."
Higgins declined to disclose the purchase price or the cost of remodeling the property.
The property is now owned by American Realty Trust Inc., which foreclosed on the Continental on March 31.
The Continental declared bankruptcy in February 1998, and was to be taken over by Crowne Gaming, its largest creditor. But American Realty foreclosed after Crowne Gaming also fell into bankruptcy. About 380 workers lost their jobs in the closure.
As the property prepares for rebirth, one thing is certain -- don't look for a rebirth of the Continental name.
"The Continental name is already off the front of the building," Higgins said. "You can be sure 'Terrible's' will appear somewhere in the new name."