March 22 (Bloomberg) -- Herbst Gaming Inc., a casino and slot operator, filed for Chapter 11 U.S. bankruptcy protection today under a previously negotiated agreement with creditors.

The petition filed in Reno, Nevada, listed $1.24 billion in debt and up to $1.02 billion in assets for Herbst and affiliates. The company will split its casino and slot machine businesses into two holding companies, Las Vegas-based Herbst said in a statement. The company plans to keep operating its 15 casinos during the reorganization, it said.

Consumers have been curbing spending in the recession, leaving casinos with falling sales and mounting debt loads. Herbst posted more than $100 million in losses in both 2007 and 2008.

The debt load was “burdensome,” Chief Executive Officer Troy Herbst said in the statement.

Earlier this month, the company said its reorganization will convert about $847 million under its credit facility into debt of the reorganized companies, as well as cancel about $330 million in bonds. The Herbst family will get a 90 percent stake in the slot machine business, after contributing a new gaming license.

Herbst joins Progressive Gaming International Corp., formerly the world’s largest slot-machine maker, which filed for court protection March 20 to liquidate what remains of its assets after a January sale. Trump Entertainment Resorts Inc. filed for bankruptcy Feb. 17, just before the casino operator’s bondholders could present their petition to force that company into bankruptcy and Tropicana Entertainment LLC sought court protection in May after losing its license to operate a casino in Atlantic City, New Jersey.

Others Have Problems

Station Casinos Inc., a Las Vegas operator, proposed a bankruptcy filing Feb. 3 and is currently under consideration for a potential buyout by Boyd Gaming Corp.

Herbst, which has 5,400 employees, owns 12 casinos in Nevada, two in Missouri and one in Iowa. It has more than 6,800 gaming machines throughout the state of Nevada.

Herbst breached covenants on its debt when auditors issued a “going concern” qualification in its 2007 annual financial statements and when the company on May 13 received payment blockage notices from lenders, according to a May 16 filing with the Securities and Exchange Commission.

The case is In re Herbst Gaming; 09-50752; United States Bankruptcy Court, District of Nevada;

To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net

Last Updated: March 22, 2009 17:36 EDT