Officials: Interest still high in bankrupt casinos

Tuesday, Sept. 18, 2001 | 10:33 a.m.

The crisis faced by the Las Vegas tourism industry comes just as the bankrupt Regent Las Vegas and Vacation Village hotel-casinos come up for sale.

Larco Investments Ltd., a Canadian investment firm, has been designated the preferred bidder for the bankrupt Regent in the Summerlin district of Las Vegas with an $80 million offer. It is the third "stalking horse" bidder for the property.

Today is the deadline for interested parties to make counteroffers for the 541-room property topping Larco's bid, though it's likely bidders will be given a few more days to file bids because of disruption from last week's events. The hearing to approve a sale will be held one week later, on Sept. 25.

Despite the disruption being experienced by the Las Vegas tourism industry, interest remains strong in the Regent, said Chief Restructuring Officer Lanis O'Steen, and talks with potential buyers are continuing.

"I can't say we've seen it (interest) wane or pick up in pace," O'Steen said. "We still have quite a bit of due diligence activity. There continues to be a solid level of interest in the property."

Potential counterbidders for the Regent mentioned in recent weeks include Coast Resorts, Station Casinos Inc., Peccole Nevada Corp., PDS Gaming, Silverton owner Ed Roski Jr., Starwood Hotels and Resorts Worldwide Inc., Arizona Charlie's and Stratosphere owner Carl Icahn, and Desert Inn owner Steve Wynn. Maritz Wolff, a one-time stalking horse bidder, could re-emerge in the bidding process, insiders say, as could Tony Marnell, the creator of the Rio hotel-casino.

David Atwell, a Las Vegas hotel-casino broker, believes there will be counterbids for the property, regardless of current circumstances, though he believes the property will not sell for more than $100 million.

"I don't believe the auction will be affected by the crisis in our country because it's such a bargain to begin with and a quality property," Atwell said. He noted that the replacement value for the property probably tops $300 million.

The Regent's problem, however, has been that it has produced abysmal cash flow during its two years of operation. In some months, cash flow has actually been negative.

But that shouldn't deter bidders, Atwell said. The Regent's value lies in potential, not past performance, he believes.

"If you're buying it for cash flow, you're not a buyer," Atwell said.

Separately, interest in buying the bankrupt Vacation Village on the south end of the Strip has remained high despite the slowdown in the U.S. economy and the downturn in the Las Vegas gaming industry since the terrorist strikes, Eric Nelson Auctioneering said.

The 315-room hotel-casino is scheduled to be auctioned Nov. 20, although its owners have until five days before the auction date to get refinancing.

"We're not aware of anything changing at this point. We ran an ad on Sunday and people have responded to that ad. And those who were interested prior to the ad's publication, called this morning. So interest in Vacation Village is still maintaining," Aleda Nelson, Eric Nelson Auctioneering's president, said Monday.

The auctioneer earlier said several Las Vegas hotel owners, Californian investors and three gaming companies outside of Nevada have expressed interest in the property because of its unique location on the Strip.