Potential buyers plentiful for Regent, gaming resort’s investment banker says

David Strow

Wednesday, March 14, 2001 | 11 a.m.

The Regent Las Vegas hotel-casinos has struggled financially ever since opening its doors in the summer of 1999. But there's apparently quite a few companies that believe they could turn that around.

As the bankrupt Summerlin hotel-casino is prepared for sale, two companies have already submitted initial purchase proposals, and a third has submitted a refinancing proposal, the Regent's investment banker said. The update was provided in court documents filed Tuesday by Steven Strom, managing director of New York investment banking firm Chanin Capital Partners.

The property, owned by Swiss Casinos of America, filed for Chapter 11 bankruptcy in December. Selling the property will generate funds to help pay off creditors, who are owed more than $300 million, though few believe the proceeds will be enough to pay off all the debt.

Strom said the goal is to identify a leading bidder by April 30, and to close on a sale of the property by the end of June. Regent officials and attorneys refused to disclose the names of the interested parties -- in the past, speculation has centered around Station Casinos Inc. and financier Carl Icahn.

Though Saturday, Strom said he's contacted 84 parties to gauge their interest in acquiring or refinancing the property, and 21 have requested confidentiality agreements. Nine parties have signed these confidentiality agreements to date, which gives them access to the documents necessary to conduct due diligence on the property.

The next stage is to identify one party as a "stalking horse bidder," or the first party to make a formal bid on the Regent. The Regent and its bankers will then attempt to convince other parties to outbid this party before a final auction for the property is held.

While the Regent awaits a sale, the property has been doing better than expected this year, though it's still losing money.

An interim financial report issued by Regent Chief Restructuring Officer Lanis O'Steen indicates that the property recorded negative operating cash flow of $1.17 million from January 1 to Feb. 25. While that's a considerable loss by gaming industry standards, it's still below the $2.92 million negative cash flow the Regent originally anticipated for the period.

That was primarily caused by increased play at the Regent's casino -- gaming operating revenues came in $934,000 above projections -- and operating costs $939,000 below projections.

Since January, the Regent has borrowed $6 million of a $20 million court-approved credit facility designed to get the property through the bankruptcy process. That's $3 million less than initial projections, and should give the property more time to negotiate a sale, should the property continue to meet projections.

The Regent's original financial projections anticipated that the credit facility would be exhausted by the end of July. From January to July, the property is expected to bring in $49.5 million in revenues, and record negative cash flow of $22.3 million.

Meanwhile, John Tipton, president of Regent holding company Swiss Casinos of America, said Swiss Casinos owner Hans Jecklin has written off his entire investment in the Regent, but remains interested in future opportunities in the U.S. market.

"Obviously because of the amount of the debt, the equity is in last place," Tipton said.

Tipton said Jecklin will retain total control of the stock of Swiss Leisure Group, the parent company of the Regent and Swiss Casinos of America. This company was formerly known as Swiss Casinos Holding AG.

After changing the name of the company to Swiss Leisure, the name of Swiss Casinos AG -- the holding company of Jecklin's Swiss gaming operations -- was changed to Swiss Casinos Holding AG. Jecklin then sold 55 percent of the stock in this company to Swiss businessman Hans Rihs last month, Tipton said.