Terrible Herbst Further Downgraded by Moody's - Missed Interest Payments

Terrible Herbst, operator of 15 casinos and a slot route operation, hit a perfect storm of events in 2007 of a slowing economy, a smoking ban and increased competition that turned the company upside down, causing it to incur a $127 million loss for 2007 which was further compounded by having $1.18 billion of its debt currently due. Moody's and S & P have both downgraded Herbst's bond rating since the company failed to make interest payments in May 2008.

The company announced that it has hired two top Nevada attorneys to join its board to evaluate proposals to help the company restructure. John Brewer is a Partner in Kummer, Kaempfer, Bonner and Renshaw and John O'Reilly, who heads O'Reilly & Ferrario, is a former Chairman of the Nevada Gaming Commission.

O'Reilly and Brewer will recommend proposals to brothers Ed, Tim and Troy Herbst, who are the owners of Herbst Gaming and to the three other board members.

On April 30, 2008, the Board of Directors of Herbst Gaming, Inc. removed Ed Herbst as Chairman and CEO and made him an EVP of the company. He remained on the board but took a leave of absence for personal reasons. His brothers, Tim and Troy have taken over his duties.

On March 11, 2008 the company had signed employment agreements with Ed Herbst, Ferenc Szony, the company's new President, and the CFO, Mary Beth Higgins. The agreements are through December 31, 2009 and are renewed annually. Ed's base salary was $973,845, Ferenc and Mary Beth both received base salaries of $500,000.

The company is at the mercy of its creditors unless they can come up with a proposal that is acceptable.

John Laub is the President of the CEO-CFO Group.


1. "Herbst Taps New Directors. Attorneys to Oversee Restructuring Proposals." Howard Stutz. The Las Vegas Review Journal. June 25, 2008.

2. "Moody's Downgrades Herbst's Probability of Default Rating to Ca." Moody's Global Credit Research. May 20, 2008.

3. "Herbst Gaming Inc.'s 8.125 Notes Lowered to 'D' after Missed Interest Payment." S & P Credit Research. June 2, 2008.

4. Herbst Gaming Inc. 10-K. Filed on March 31, 2008.

5. Herbst Gaming Inc. 10-Q. Filed on May 16, 2008.

6. Herbst Gaming Inc. 8-K. Filed on March 11, 2008.

7. Herbst Gaming Inc. 8-K. Filed on May 2, 2008.