Financier Ichan in control at Stratosphere

Friday, May 15, 1998 | 3:20 a.m.

RENO -- Financier Carl Ichan gained control of the Stratosphere hotel-casino in Las Vegas Friday at a hearing of the bankruptcy court that approved a reorganization plan.

U.S. Bankruptcy Judge Greg Zive said the plan to rescue the resort from Chapter 11 appears feasible and is "proposed in good faith."

Attorney Gerald Gordon, who represented the Stratosphere, said Ichan, through his companies, will hold 51 percent of the Stratosphere; a company called Sky High will have 37 percent and the rest of the stock is divided among about 120 holders of first mortgage bonds.

Ichan did not appear at the telephone conference hearing but Gordon said he has already applied to the Nevada Gaming Commission for a license. The investigation of his background, and that of his companies, is underway.

A spokesman for the state Gaming Control Board said the application would be ready for action this summer.

Gordon said the company was $323 million in debt of which $203 million was secured. Under the reorganization, the bond holders interest will be converted to equity and they will receive about $6 million. The equity of the current stockholders has been can celled, leaving them out in the cold.

The new organization will end up $13 million in debt, Gordon said. The present operation will continue until the state gaming regulators approve the application of Ichan and associates. Gordon noted it present has enough money to pay current debts.

Gordon said he didn't know what Ichan planned to do. But it was previously reported the financier would use his High River Limited Partnerships and American Real Estate Partners to invest $100 million to add 1,000 hotel rooms to the current 1,500 rooms.

Still not resolved is the fate of subtenants such as shoe, hot dog, art and antique businesses at the Stratosphere. Attorney Nancy L. Allf, representing these five tenants, hasn't been permitted to participate in the bankruptcy reorganization plan.

Allf said the "leases (now paid) are not feasible. The rents are more than the gross receipts." But this case is in litigation in the district court in Las Vegas and the rents have been held in abeyance.

Zive said he will consider later the issue raised by the subtenants. And he has set Aug. 27 for a check on the status of the reorganization.

The re-organization plan also settles the claims from 19,038 people who bought vacation packages ranging anywhere from $400 to $5,000 at the Stratosphere.

Ara Shirinian, an attorney for this group, said they will receive a total package of $20 million to $25 million, from the plan. They will receive 161,000 room nights. It will range from two nights to 70 nights at the hotel, depending on the vacation package purchased. There will be unlimited free drinks for these customers. And the $6 entrance fee to the tower will be waived for the individual and spouse.

Their annual dues which could be $150 a year will be waived. But this group will not get the $16 million in free gaming chips promised. A portion of that will go to attorney fees.

Zive agreed that the three lawyer firms that represented the vacation package holders should split $2.9 million. He said there has been "some pretty good lawyering" by these attorneys who produced some "creative thinking."

Zive said the 19,038 will receive 80-82 percent of what they bargained for. He suggested the vacation package holders could have ended up with a limited recovery.

Gordon said the financial position of the hotel-casino has improved with its cash rising from $22 to $24 million and with "higher accounts receivable." Total assets at the resort are $148 million, he told the judge.