Luery returning to guide Regent through bankruptcy proceedings

David Strow

Wednesday, Nov. 22, 2000 | 10:57 a.m.

Just hours after filing for bankruptcy protection, Regent Las Vegas officials said they hope a new focus on the locals market will finally turn the tide for the struggling 16-month-old property.

The property will be launching this initiative under a familiar name -- Vice Chairman Darrell Luery, who stepped aside as the Regent's chief executive less than two months ago. Luery will assume the CEO's job on an interim basis during reorganization.

"Very frankly, I think the Regent has missed focusing as much as it could on the locals market," Luery said. "Our base has to be the locals customer, primarily out of Summerlin. This is a luxury facility, and has group business and hotel business ... that's very appealing, but by itself, it's not enough.

"There's a line in marketing that says you fish where the fish are. We have this large Summerlin market we think we could do a lot more for and with."

On Tuesday afternoon, Regent parent company Resort at Summerlin filed for Chapter 11 bankruptcy protection. This filing shields the company from creditors while it seeks to reorganize; it does not indicate plans to close and liquidate.

The company listed assets of $296.4 million and liabilities of $365.8 million.

Despite the filing, Luery said there are no plans to lay off more of the Regent's 1,200 workers, nor are there plans to shut down any more facilities. About 250 people were laid off in October, shortly after the property halted interest payments to the holders of $120 million in junk bonds.

"We're not anticipating any particular layoffs at this point ... (1,200 employees) seems to be at the right level for that operation right now," Luery said.

The company still isn't revealing its financial results, which have not been reported to the Securities and Exchange Commission for a year. But Luery confirmed the Regent is currently operating at negative cash flow.

The Regent's ability to stay open under such circumstances will be assisted by a $20 million "debtor-in-possession" loan extended to the company by holders of $100 million in mortgage notes -- enough cash to get the property through the bankruptcy period, Luery believes. These creditors will receive first priority in debt repayment.

Next in line would be unsecured creditors, which include the holders of the $120 million in junk bonds. The largest bondholders include John Hancock Life Insurance Co. of Boston, owed $30 million; AIM High Yield Funds of Houston, owed $26.4 million; and RBC Dominion Securities Corp. of Greenwich, Conn., holder of $7 million in bonds.

Large trade creditors include R&R Partners of Las Vegas, owed $284,000; Image Construction Inc. of Las Vegas, owed $222,000; Lithexcel of Albuquerque, N.M., owed $149,000; Western Tile of Las Vegas, owed $124,000; and Sprint, owed $119,000.

But Luery didn't identify the secured creditors who extended the $20 million loan, with the exception of one -- Carl Icahn, New York investor and owner of the Stratosphere and two Arizona Charlie's properties in Las Vegas. Icahn acquired both the Stratosphere and Arizona Charlie's West in bankruptcy proceedings.

"We've talked to noteholders as a group, and he's been among the participants in those discussions as part of the overall group," Luery said.

Icahn doesn't hold a majority position in the bonds, and has not yet indicated any plans to attempt to take over the Regent in bankruptcy court, Luery said.

Icahn assumed control of the Stratosphere by taking a majority position in the hotel-casino's bonds, then winning court approval for a plan to convert that debt into equity. At the Regent, the largest equity holder is Seven Circle Resorts Inc., a subsidiary of Swiss Casinos of America Inc.

When asked if Resort at Summerlin would consider this route at the Regent -- or whether the company would attempt to sell the property to cure its debt -- Luery said all options remain open.

"We have to consider everything, but I'm not aware of anything in particular," Luery said. "Our No. 1 priority is to the noteholders and the bondholders ... by law, that has to be our priority. We just want the business to be successful so we can get on with life."

Several parties that have been mentioned as potential buyers of the Regent -- Steve Wynn, Station Casinos Inc. or Coast Resorts Inc. -- haven't made approaches to this point, Luery said.

"You can throw out just about any name you want," Luery said. "It is an absolutely gorgeous property, in a very affluent market ... who wouldn't be interested in it?"

It could, however, be a starkly different property before long. In July 1999, the Regent opened its doors as a golf-oriented, upscale resort aimed at tourists who wanted to avoid the Strip. Now, Luery said, it will focus hard on the nearby residents of Summerlin.

That will mean new amenities at the Regent Las Vegas -- some that would have been unthinkable just a year ago. Some new efforts will include a bingo hall, a coffee shop and lower betting limits at the Regent's table games.

"I've been in this business for 25 years, and ... we know the kind of things that appeal to our customers," Luery said. "They want to have a good time, good value and good fun. Our point of difference is our luxury surroundings, but you can't live on that alone.

"I know that if we get enough time, we can make it."

But Regent International Hotels, which licensed its high-end hotel brand to the property, has no plans to back away from the property now that it has fallen into bankruptcy. Regent International is owed $79,000 in licensing fees, according to the Resort at Summerlin bankruptcy filing.

"Regent International Hotels is supportive of the ownership of the Regent Las Vegas in resolving issues ... which resulted in a technical bankruptcy," Regent International said in a Tuesday statement. "Regent International Hotels is very enthusiastic about the exceptional high quality of the Regent Las Vegas, which has earned national acclaim for its luxurious facilities and services.

"Regent is pleased that this outstanding resort is part of the global organization of Regent hotel(s) and resorts and is supporting the property ownership and management in dealing with the capital structure issue."