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LAS VEGAS -- The Herbst Corp., operator of more than 100-unit Terrible Herbst c-store chains, enrolled Goldman Sachs to evaluate financial and strategic alternatives for its gambling business, Herbst Gaming, including a possible sale, the Las Vegas Review Journal reported.
The division cited lost customers at its slot machine route operation due to a statewide smoking ban, which hit the company financially and cut profits, the report stated. Herbst's slot route includes more than 7,000 slot machines inside nearly 700 restaurants, taverns, convenience stores, bars and grocery stores, the report stated.
Alternatives could include a recapitalization, refinancing, restructuring or reorganization of the company's debt, or a sale of some or all of its businesses, the Journal reported.
"The recent impact from […] the Nevada smoking ban and general economic weakness has required us to explore our alternatives," division president and CEO, Ed Herbst, said in a statement cited by the paper. "We are confident that our retention of a financial adviser will help us capitalize on the strength of our brand and position the company to maximize long-term value."
Nevada's statewide smoking ban took effect January 2007 and outlawed smoking in locations where Herbst operated its slot machine route, the report stated. Revenues from the slot route dropped more than 20 percent in the third quarter, and are down nearly 19 percent through the first nine months of 2007, the Journal reported.
In Terrible Herbst's third quarter earnings, it suffered a net loss of $28.9 million and had a net loss for the first nine months of fiscal 2007 of $34.1 million, according to the report.