Roski, Park Place sue each other over failed sale of Las Vegas Hilton

Tuesday, Jan. 16, 2001 | 11:31 a.m.

The legal battle has begun in the death of the Las Vegas Hilton sale, with Park Place Entertainment Corp. and Los Angeles developer Ed Roski Jr. suing each other over the failed deal.

Park Place announced today that the sale of the Hilton to Roski is off, after Roski failed to meet the Monday deadline to close on the deal. The failure of the deal had been expected since Jan. 4, when Park Place said in a press release it did not expect Roski to close on the transaction.

Park Place fired the first legal salvo, accusing Roski of breach of contract in federal and state lawsuits. In the lawsuits, Park Place asked for a declaratory judgment entitling it to keep Roski's $20 million deposit. Park Place is also asking for more than $20 million in compensatory damages.

Neither Roski nor his attorneys could be reached for comment this morning. However, in a state lawsuit filed this morning, Roski accused Park Place of breach of contract over a "significant and substantial downward trend" in cash flow at the Las Vegas Hilton, which Roski said made it impossible to find the necessary financing to close the deal. Roski is asking for unspecified damages.

Sources had indicated Roski held unsuccessful talks with financier Carl Icahn and International Game Technology Chairman Chuck Mathewson about becoming equity partners in the hotel-casino.

Park Place said it will not put the property back up for sale. Analysts expect this will result in dilution of future Park Place earnings; in the quarter ending Sept. 30, the Hilton reported negative cash flow of $1 million. Much of the Hilton's high-end business had been moved to other Park Place properties in anticipation of the deal; the purchase contract called for Park Place to retain all high-end customer lists.

"Going forward, we'll provide the (high-end) customer with the experience they want, whether at the Las Vegas Hilton, Caesars or Paris," said Scott LaPorta, chief financial officer of Park Place. "We will continue to emphasize our hotel-convention business as well as continue to host our casino customers and provide them the experience the casino continues to offer."