Icahn gains approval for Arizona Charlie’s East

Thursday, April 6, 2000 | 11:02 a.m.

Stratosphere

Construction has started on the $65 million, 1,000-room addition at the Las Vegas Stratosphere hotel-casino, which is controlled by Carl Icahn.

The project will take about 14 months to complete, Icahn consultant Dan Cassella said.

Financing on the addition at the present 1,400-room Stratosphere hasn't been secured but Icahn is providing a bridge loan, Cassella said.

Cassella said the Stratosphere has turned a profit but is still struggling. It realized a 10 percent return on investment but it should be doing better, he said. Room occupancy is in the low 90 percent range, he said.

There are still lawsuits pending with retail tenants at the Stratosphere, but Cassella said he expected a buy out to resolve the dispute.

CARSON CITY -- Financier Carl Icahn on Wednesday gained preliminary approval for his third casino in Clark County, Arizona Charlie's East Hotel & Casino, which he purchased for $43 million in a bankruptcy sale.

Icahn, said his consultant Dan Cassella, will spend another $12 million for improvements at the 300-room hotel on the Boulder Strip between Sam's Town and Boulder Station.

Icahn has a history of buying distressed properties and then turning them into profitable operations.

The new property, formerly called Sunrise Suites, will be fashioned after Icahn's Arizona Charlie's on Decatur Boulevard. "We'll copy the success at Arizona Charlie's West," Cassella told the board, which recommended approval of the application.

"There will be low 3.3 percent machines, lenient table games and cheap food. We lose $300,000 a month on food at Arizona Charlie's (West) and I assume it will be the same" at the new hotel-casino, Cassella said.

The 3.3 percent refers to the hold percentage on slot machines and Cassella said that would probably be the third lowest in Clark County.

There will be 826 slot machines and 13 table games at the casino to open on the Tuesday before Memorial Day with 600-700 employees.

Sunrise Suites was formerly owned by Michael and Rhonda Mona but they were unable to get a state license to operate the casino. There were questions at the time in December 1998 about Michael's association with organized crime figures and with people involved in illegal telemarketing. The property later went into bankruptcy.

The hotel continued to operate and Cassella said the present rates of about $50 a room would probably be lowered to the $40 range.

At Arizona Charlie's on Decatur Boulevard, Cassella said the casino, under the ownership of Icahn for less than two years, has tripled its income. "We're doing $10 million better in profits than a year ago."

He said $5 million was shaved from expenses and there was a gain of $5 million in profits.

The state Gaming Commission will meet April 27 in Carson City to take final action on the acquisition.

In another Clark County application, the board recommended approval for Swiss Casinos of America Inc. to buy back some stock from its executives. Swiss Casinos operates Regent Las Vegas, formerly called the Resort at Summerlin.

John Tipton, president of the resort, said owner Hans Jaeklin has put in an additional $36 million to $37 million because of construction delays and cost overruns. Lawsuits are pending over the extra costs and the delays in the building of the hotel-casino.

Tipton told the board its room occupancy for February was close to 80 percent. Rooms go from $190 to $212 a night. The project opened before it was completed and has been struggling to turn a profit.

The corporation is buying out Quinton Boshoff, who had 300 shares, and Brian McMullan, who owned 600 shares. It is also purchasing 300 shares from Tipton, who is staying on at the resort.

No price was disclosed for the purchase of the stock.