When two private investment funds decided to swap a billion dollars of debt for equity and assume control of Vancouver-based Gateway Casinos, they turned to industry veteran Lorenzo Creighton to fill the CEO role. For Creighton, heading up Canada’s second-largest casino operator is just the latest move in a career that he came to almost by accident.
“I never really planned on being in the business,” says Creighton. “I was doing some labor work for the state of Iowa and saw an advertisement for a deputy director of their racing and gaming commission in 1989. I applied for the job and got it, and being the law-trained person on the team put me in position to write the regulations.”
After Iowa, Creighton was recruited by Mississippi as executive director of its gaming commission. In the early 1990s, he entered the private sector, taking a series of executive positions with operators in the South and Midwest and eventually Las Vegas, where at New York-New York he became the first African-American president of a Las Vegas Strip property.
In 2008, Creighton was named president and COO of the MGM Grand Detroit Hotel and Casino. Despite the tough economy of the past two years, he succeeded in growing revenue and profit in a market with three competing casinos.
The offer to leave Detroit for Vancouver came with a sweetener. Along with majority stakeholder Catalyst Capital Group and minority owner Tennenbaum Capital Partners, Creighton has his own small piece of the company. His challenge now is to generate cash to pay down more debt.
“Our story right now is a deleveraging story,” says Creighton. “We’re five-times leveraged and we want to get it down to about three-and-a-half-times leveraged, and then launch an IPO. Our plans are conservative, for only a 3.6 percent growth versus the extreme growth projections you might hear from some other companies.”
The two private investment firms already reduced company debt to $500 million when they took control. During a recent road show, they managed to revamp the remaining debt at a better interest rate.
Still, debt reduction remains job No. 1. Gateway has nine casinos: three in the Vancouver area, four elsewhere in British Columbia and two in Edmonton, Alberta. It is a crowded environment, but Creighton is optimistic.
“The economy and GDP growth continues to look very good in Alberta and in British Columbia,” he says. “Population continues to grow, and both Alberta and British Columbia have a very strong natural resources industry.”
Creighton sees Vancouver as the most promising market.
“Forty percent of the population in Vancouver is Asian,” says Creighton. “We have a huge Chinese population. The city has direct flights to Macau. All of the big gaming companies have branch offices in Vancouver, which tells you something about the potential of the market.”
Turning potential into results is the trick. Creighton’s formula:
“You go in and look for efficiencies and you look for things that work in the neighborhoods. You make sure you rationalize the business. Absolutely there is opportunity in improving the top line and in getting expenses under control.”