Icahn to launch expansions at three Las Vegas properties

David Strow

Tuesday, Feb. 22, 2000 | 10:41 a.m.

New York financier Carl Icahn plans to embark on $100 million in expansion activity at his three Las Vegas properties within 60 days, one of his top Las Vegas executives said Monday.

At the top of the list -- the opening of Arizona Charlie's East on the Boulder Strip in April.

Shortly after will come expansions of the original Arizona Charlie's on Decatur Boulevard near Charleston Avenue, and the long-awaited expansion of the Stratosphere hotel-casino on Las Vegas Boulevard.

Icahn acquired the Boulder Strip's Sunrise Suites hotel-casino Jan. 26, bidding $43.3 million for the property. Sunrise Suites includes a 300-room hotel and 224-space RV park.

Icahn is working on getting the property licensed. Tom Lettero, executive vice president and chief financial officer of the Stratosphere, said Arizona Charlie's East should open within 60 days. Lettero will assume the top executive position at Stratosphere Feb. 29, when Dan Cassella resigns as chief executive.

"Arizona Charlie's is definitely the way to go," Lettero said. "People were very happy to hear that. People loved the thought of having an Arizona Charlie's on the east side. We knew it would be a perfect fit."

The property will have common management with the original Arizona Charlie's, and will eventually be cross-marketed with its sister property, sharing the original casino's "Charlie Card" slot player club.

Icahn plans to spend about $3 million to purchase 800 machines and 10 table games for the new property. Though there's a new theme for the casino, there are no plans to refurbish the Mediterranean-themed casino, which has never opened to the public.

"The physical facility won't look as much like Arizona Charlie's, but the product will be similar," Lettero said. "The (restaurants) will be priced along Arizona Charlie's lines, and the looseness of the machines will be consistent with Arizona Charlie's.

"You don't want to spend too much money making it look older."

Meanwhile, Icahn plans to launch the first phase of expansion at the original Arizona Charlie's on the west side.

The $11 million project, slated to begin in 60 days, will add about 3,000 square feet to the casino, boosting its slot inventory by about 300 machines. Lettero said the expansion includes an expanded bingo room, an improved parking layout and a more customer-friendly layout for the casino floor.

"We have some substantial improvements we're looking at right now," Lettero said. "The property should grow very systematically, certain pieces at a time. We don't want to interfere with our patrons."

Depending on the success of Phase 1, a second wave of expansion could begin shortly afterward, Lettero said.

Preliminary plans for Phase 2 include adding another 40,000 square feet of casino space, a bowling alley and a parking garage, Lettero said. That project would cost about $22 million.

It's an ambitious project for a property that was rumored to be on the sales block less than a year ago -- rumors that Icahn had tried to quash.

"(Icahn) is very happy with Arizona Charlie's performance," Lettero said. "It was better than what was expected, and continues to get better."

The final piece of the expansion puzzle for Icahn is the Stratosphere. A 1,000-room hotel tower was under way when the property ran out of cash in September 1996, and has sat uncompleted since the Stratosphere went bankrupt in January 1997.

Icahn has talked about completing that expansion since August 1997, when he assumed control of the property. He reiterated those expansion plans in September 1999 at a meeting of the Nevada Gaming Control Board.

Now, Lettero said the $65 million expansion should receive building permits from the city "in the very near future," leaving the door open for expansion to begin in six months.

"We need to resolve the financing," Lettero said. "The Stratosphere itself does not have the money to finance the expansion, but obviously with Mr. Icahn, it may be fairly easy."

The project would increase the hotel to nearly 2,500 rooms. Once begun, the project would be complete within 14 months.

It has been delayed by considerations of where to place the property's entertainment facilities, but the decision has been made to move much of these facilities to the expanded space. Icahn is also considering buying out the hotel-casino's mall from Strato-Retail, whose legal fights with tenants and the hotel-casino have caused delays in the expansion project.

"(The legal battles) have been substantially resolved," Lettero said. "(Purchasing the mall) is something Mr. Icahn is still considering."

The project will also add a pool area to the Stratosphere, as well as a coffee shop to the casino floor. Icahn sees these amenities as being essential to the future of the project, and believes more rooms will help drive more patrons to the Stratosphere casino.

"The pool area is something the property desperately needs, especially in the summer months," Lettero said.

Lettero was unable to provide any details on how Icahn, who controls nearly 90 percent of the Stratosphere's stock, planned to finance the expansion project.

"That's an issue for (Icahn) to decide," Lettero said.