DATE: Tuesday, November 18, 1997            TAG: 9711180253

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

                                            LENGTH:   65 lines

COLONIAL DOWNS CEO MAKES BID FOR MERGER JACOBS ALREADY OWNS INTEREST IN A COLORADO CASINO COMPANY.

Colonial Downs Holdings Inc., operator of the horse-racing track in New Kent County and two betting parlors in Chesapeake and Richmond, said its chief executive officer is interested in merging the company with a Colorado casino concern.

Jeffrey P. Jacobs, Colonial Downs CEO, owns a substantial interest in the Boulder, Colo., company, Black Hawk Gaming & Development Co.

Jacobs also serves as chairman and chief executive of Black Hawk, which is the operator and half-owner of the Gilpin Hotel Casino in Black Hawk, Colo. The company is building a second hotel and casino, The Lodge Casino at Black Hawk.

This proposed combination would be put to the two companies' boards of directors next spring, Colonial Downs said.

Any acquisition of 5 percent or more of Colonial Downs' stock would require approval by the Virginia Racing Commission, the Providence Forge-based company said.

Separately, Colonial Downs said it earned a modest profit for the quarter ended Sept. 30, which included the first live racing at its New Kent track. The company reported net income of $80,000, or 1 cent a share, for the three months ended Sept. 30.

Colonial Downs had a net loss of $213,000 or 7 cents a share, for comparable quarter of 1996.

However, Colonial Downs suffered an operating loss of $115,000 for the recent quarter. This was offset by interest income.

At the end of the Sept. 30 quarter, Colonial Downs had slightly more than $9 million in cash, which included some of the proceeds from its initial public offering of stock last March.

Earlier this month, Colonial Downs' shares sank to a low of $4.625 after voters in Roanoke, Martinsville and Fredericksburg overwhelmingly rejected proposals for building off-track betting parlors in their cities.

In a discussion with securities analysts, the Colonial Downs management said they encountered heavy resistance from religious groups when they campaigned for approval of the betting parlors. They said the company probably will seek voter approval for parlors in other Virginia cities next spring and fall.

Colonial Downs said it expects two betting parlors already under construction in Hampton and Brunswick to open in December. Its shares closed Monday at $5, up 6 cents for the day.

The price of its stock, which became public in March at $9.50 a share, has languished in recent months. However, the company said it has no plans to buy back any of its shares.

``At these prices, it's tempting,'' but the company needs its cash for expansion efforts, said O.J. Peterson, Colonial Downs' chief operating officer.

Colonial Downs also said it expects to resolve a dispute over several million dollars of construction bills through arbitration. Norglass, a contractor involved in building the track facilities in New Kent County, recently filed mechanics' liens for $11.8 million of bills. Colonial Downs said it has already paid part of that amount to Norglass. ILLUSTRATION: [Color Photo]

MOTOYA NAKAMURA

The Virginian-Pilot

A steward watches from the rail as competitors are cooled down at

Colonial Downs in New Kent County. The track's holding company

reported net income of $80,000 for the quarter ended Sept. 30.

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