LVEN still hopes to sell former El Rancho property

David Strow

Thursday, Sept. 30, 1999 | 10:54 a.m.

Las Vegas Entertainment Network Inc. said it expects to close on the sale of the El Rancho property on the Strip by today -- but warns that if it fails, the company's ability to stay in business could be in jeopardy.

In the company's quarterly report, filed Sept. 24, LVEN said that a company referred to as "Countryland USA" signed an agreement to purchase the defunct property Aug. 16. Los Angeles-based LVEN does not own the property, but will receive a commission if it is successfully sold.

The deal was originally expected to close by the end of July, but "the agreement between Countryland USA and (El Rancho's owner) did not close as scheduled, and the parties are currently intervening to structure a closing time frame that meets all parties' needs," according to LVEN's filing.

The property is owned by International Thoroughbred Breeders Inc., a defunct company located in Cherry Hill, N.J. All that is known about Countryland is that it is incorporated in Nevada, and that it has lined up $354 million to renovate the El Rancho property, according to previous LVEN filings with the Securities and Exchange Commission.

LVEN is also awaiting the close of a financing deal that would give six trusts a 53 percent stake in the company in exchange for $305 million cash. This transaction will be critical to the future viability of LVEN, the company said.

The deal would be valued at $101.60 per share, nearly $100 above LVEN's current market value. But this deal, also announced in July, has not closed. If it failed to close, LVEN said it would receive a gold certificate valued at $3 million.

LVEN does not have much more time to close on that financing. The company lost $1.28 million, or 26 cents per share, during the quarter ending July 31. It reported no revenues for the quarter.

Over those three months, LVEN spent about $376,000 in cash. That leaves it with a cash reserve of $177,619, as of July 31. If it maintains its average monthly cash burn rate, and doesn't close on any additional financing, the company would run out of funds no later than November. LVEN has been meeting its capital needs partly through loans made by its chairman. As of July 31, he had loaned the company $443,000.

"As a result, and until financing agreements can be finalized, the company's independent auditors have expressed substantial doubt about the company's ability to continue as a going concern," LVEN's filing stated.

LVEN plans to use about $5.5 million in funds from the proposed deal to finance a buyout of Brazilian company Sulmatic Administradora De Bens Ltd. This deal also has not closed, apparently because of a lack of available funds.

If neither the Sulmatic deal or the El Rancho deal closes, the company said it may fall below the Nasdaq's listing requirements and be dropped from the exchange.