Rick’s Cabaret strips down $$ for Scores takeover

Rick’s Cabaret has, er, stripped down the amount of cash it will have to dole out to buy adult nightclub Scores-Las Vegas.

Instead of having to pay $16 million in cash, Rick’s has been able to renegotiate the terms to pay just $12 million in cash in the $21 million deal.

The extra $4 million can now be made as a non-convertible promissory note with an interest rate of 8 percent.

Nice. But the deal isn’t as sweet for parties having to complete purchases that they agreed to before the casino industry’s luck started to turn.

The casino industry was always believed to be recession-proof: when the economy is doing well, people go to casinos to spend money. It’s fun. When the economy is not doing well, people go to casinos to make money. It’s no fun.

But casinos are now proving to be vulnerable to the downturn. Rising gas prices and falling home values are making consumers think twice about traveling to casinos and gambling or shopping at the luxury boutiques and restaurants where casinos draw most of their profits.

Amid these changes, Penn National Gaming’s pending $6.1 billion buyout by private equity firms Fortress Investment and Centerbridge Partners continues to be, well, pending. The PE firms seem to have had a change of heart and a delay in getting regulatory approvals from states is only helping them do the dilly-dally.

Things have changed since these firms agreed to buy the casino company last June. A Wall Street Journal report on Tuesday said turnaround and bankruptcy experts are getting more calls from casinos than they have in years as the operators struggle with less access to cash amid expansion plans and billions of dollars of debt.

The report quoted Gary Loveman told the Journal this is “the toughest environment” they’ve ever faced.

As the hands dealt to these players have changed, we can probably expect to see renegotiated buyouts, fewer sales and more bankruptcies.