Regent operating ahead of expectations as sale nears

David Strow

Wednesday, June 6, 2001 | 11:01 a.m.

The Regent Las Vegas is continuing to perform ahead of financial expectations as it nears the final chapter in its journey through bankruptcy.

In a financial report presented in federal bankruptcy court Tuesday, the Regent indicated it has posted just under $2 million in negative operating cash flow from Jan. 1 through May 20. Actual cash flow, which includes reorganization charges and interest payments on post-bankruptcy financing, was negative $9.7 million as of May 20.

While that sounds disappointing, it's far better than the projections that were made when the Summerlin hotel-casino went into bankruptcy late last year. By this time, the Regent was projected to have posted $7.3 million in negative operating cash flow, and $15.3 million in total negative cash flow.

"Mr. (Lanis) O'Steen (the Regent's chief restructuring officer) and management have been doing a good job of managing the property through a difficult period," said Frank Merola, attorney for the Regent.

Originally marketed as a destination golf course and spa resort that would compete with similar resorts in places like Palm Springs, Calif.; and Scottsdale, Ariz., the Regent is now marketing aggressively to Las Vegas locals like those in the relatively affluent neighborhoods in the Summerlin district of Las Vegas.

The performance means that the Regent has borrowed $12 million of a $20 million credit line extended by certain creditors in January, rather than the $14 million that had been projected.

That's a bit of good news for the creditors -- the Regent's debt is estimated to exceed $300 million, and the current bid for the Regent, a $150 million offer by Peccole Nevada Corp., won't come close to covering all of that debt.

Heavier-than-expected borrowing would reduce the amount of money available to pay unsecured creditors, if there is any.

The creditors have been pinning their hopes of a larger repayment on a $200 million lawsuit filed last year by the Regent against the project's construction manager, J.A. Jones Construction Co., and three contractors over construction delays and other problems. On Tuesday, an attorney for the Regent in that case suggested that hope may have some merit.

Todd Touton told bankruptcy Judge Robert Jones that the Regent and one of the defendants agreed to settle following talks in Oakland, Calif. That defendant was not identified.

He said a settlement proposal would be brought for a federal judge's approval this summer. Any proceeds the Regent receives in a settlement could be used to help repay unsecured creditors, who currently don't stand to get any repayment under the Peccole bid.

Although that would leave three defendants, Touton said all parties felt progress had been made in these talks, and that the Regent and the contractors agreed to resume settlement talks Aug. 2. After the court hearing, Touton declined to comment on terms of the settlement or which parties had settled, citing confidentiality agreements.

Another hearing in the Regent case has been set for June 19, at which time attorneys for the property will outline the process by which the Regent will be sold, and what qualifications will be sought from competing bidders. Peccole is considered the "stalking horse" bidder, meaning it has the right to match any higher offer for the Regent.

A hearing will then be held July 10 to formally approve a buyer for the property.

"The range of offers and people contacted was as wide as I've ever seen in a case of this type," Merola said.