Icahn buys bankrupt Sunrise Suites, his third LV property

David Strow

Thursday, Jan. 27, 2000 | 11:09 a.m.

Financier Carl Icahn expanded his Las Vegas holdings Wednesday, acquiring the defunct Sunrise Suites Hotel & Casino and RV park on the Boulder Strip for $43.3 million.

Shortly after landing the property, Icahn representatives said they were looking at recreating the Arizona Charlie's theme on the Boulder Strip.

Icahn beat out General Bank, one of the property's creditors, in Wednesday's bankruptcy auction. Icahn bid $34 million, edging General Bank's $33 million bid for the hotel-casino.

In placing the winning bid, Icahn had the right to acquire the 224-space RV park nearby for $8 million, which he exercised. Icahn also paid a 3 percent buyer's premium on the purchases, bringing the total price above $43 million.

For Icahn, it's the third Las Vegas casino he's bought out of bankruptcy. Icahn currently owns the Stratosphere and Arizona Charlie's hotel-casinos in Las Vegas.

Dan Cassella, chief executive of the Stratosphere and Icahn's financial advisor, talked Icahn into the purchase after scouting out the property. Cassella, who was in attendance at the auction, said Icahn wants to create a casino very similar to Arizona Charlie's.

Icahn is even looking at branding the Boulder Strip casino under the Arizona Charlie's name, though some legal issues must be resolved before that can happen, Cassella said.

"We'd like to duplicate Arizona Charlie's any way we can," Cassella said. "We'll bring a friendly casino to this part of town, and we'll do well."

Once the casino finally opens, it will probably feature the western motif used by Arizona Charlie's, though Cassella said a final decision on the theme has not been made. Icahn plans to use some common management between the two properties.

"I just felt if we could get it cheap enough, we could have efficiencies of scale with Arizona Charlie's," Cassella said. "We feel we could get more than decent returns on ($34 million)."

Separately, Cassella said he is resigning as CEO of the Stratosphere, saying his last day would be Feb. 29. The top spot of the hotel-casino, Cassella said, is going to Tom Lettero, currently chief financial officer of the property.

But Cassella said he will continue to work for Icahn and will search for future acquisition opportunities.

"We're always looking (for acquisition opportunities) if they make sense," Cassella said.

The Sunrise complex, sitting on 24 acres of land between Boulder Station and Sam's Town, encompasses a 300-room hotel and a 73,000-square-foot casino. The RV park has 224 rental spaces.

The hotel first opened in 1991, but the casino was completed just one year ago. The casino, which has a Mediterranean theme, has room for as many as 1,000 slots and 15 table games.

The casino was originally scheduled to open to the public on Dec. 27, 1998. But those plans came to a halt after the Nevada Gaming Control Board questioned the background of owner Michael Mona Jr. during a December 1998 licensing hearing.

The board challenged Mona's relationship with a group of telemarketers who ran afoul of the Federal Trade Commission in 1993, as well as Mona's accounting practices. Mona denied wrongdoing, but asked the board to refer the application back to staff, rather than denying it outright.

The application was never resubmitted, and the company declared bankruptcy in March, claiming liabilities of $68 million.

In all, Wednesday's auction of the hotel-casino, RV park and various property netted $45 million, though $3 million in equipment was acquired by creditors, who credited the equipment against the amount they were owed, rather than paying cash. The auctioneer, rather than the estate, received the 3 percent premium on the Icahn purchases, or about $1.26 million.

The property had been assessed at $35 million just before the bankruptcy, though Eric Nelson Auctioneering said the property carried a replacement value of more than $65 million. Any liens and claims against the property will not carry over to Icahn.

"I would say it went at just about the right number," said David Atwell, a Las Vegas hotel-casino broker who attended the auction. "Boulder Highway has been producing well, and properly run, the hotel-casino should make substantial money.

"I think Arizona Charlie's has got a catchy theme, and I think it would work."

Candace Carlyon, the attorney handling the liquidation of the Mona assets, said about $7 million in secured claims and $4 million in unsecured claims remain. She will now proceed with the sale of an 18-acre parcel of vacant land at Las Vegas Boulevard and Warm Springs Road controlled by Mona. A date for that auction is expected to be released next week.

"We have had a lot of interest in that property, but no one knows how much it will sell for," Carlyon said.