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Old Posted Sep 8, 2005, 3:02 AM
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Storm-tossed Pinnacle starts casino
BY ERIC HEISLER
Of the Post-Dispatch
09/06/2005




Its Mississippi casino was massively damaged last week, but Pinnacle Entertainment Inc. still will break ground today on a $400 million casino complex in downtown St. Louis.

Today's ceremony comes after Pinnacle's Casino Magic Biloxi was battered badly enough by Hurricane Katrina that it might not be salvageable, the company said Tuesday. Its New Orleans casino was banged up, too.

But company officials said construction will begin as planned on the Laclede's Landing complex and, in October, on a second casino, in south St. Louis County.

"In terms of our company, life does go on," said Dan Lee, chairman and chief executive of Las Vegas-based Pinnacle. "It will be somewhat of a subdued ceremony because of what's happened, but we are moving ahead."

McCarthy Building Cos. of Ladue will be the general contractor for the downtown project, Pinnacle announced Tuesday.

Along with a casino featuring 2,000 slot machines, the complex will include a new hotel and spa. It's expected to open in 2007.

Pinnacle also said it has closed on the $38 million acquisition of the Embassy Suites Hotel from FelCor Lodging Trust. The Embassy Suites will be connected to the downtown casino by a pedestrian walkway.

While Katrina likely damaged Pinnacle's properties to the tune of more than $100 million, the company still is in a good position to make major investments in St. Louis, analysts said. That's because the company is insured for up to $400 million on the New Orleans and Biloxi, Miss., complexes, company officials said.

"While those properties won't be generating cash, they're protected with insurance," said Andrew S. Zarnett, an analyst with Deutsche Bank Securities. At most, "there could be a short-term delay based on the clarity of the insurance and the clarity of the redevelopment in the Gulf Coast."

Last year, the Missouri Gaming Commission chose Pinnacle to build both St. Louis area casinos. The two will raise the number of casinos in the region to seven.

Besides its Gulf Coast properties, the company operates casinos in Indiana, Nevada and Argentina.

Last week, the Biloxi casino was lifted by a storm surge and moved several hundred feet, Pinnacle said. Katrina also punched holes in the exterior that leave slot machines and other equipment inside vulnerable. A hotel on-site might be a total loss, the company said.

One Pinnacle building in Biloxi "now looks like toothpicks," Lee said, but the company intends to rebuild the complex. Pinnacle sustained less damage in New Orleans, though that casino will be closed for an undetermined amount of time, Lee said.

"We're trying to assess the impact right now" on the two properties, Lee said, "but it's clear that it's large."
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