Lady Luck sold

Friday, July 19, 2002 | 11:12 a.m.

Casino operator Isle of Capri Casinos Inc. announced an agreement Thursday to sell its money-losing, 792-room Lady Luck hotel-casino in downtown Las Vegas to AMX Nevada LLC.

Biloxi, Miss.-Isle of Capri didn't disclose the purchase price.

AMX Nevada is a newly formed entity that is incorporated in Delaware and is made up of a group of investors with holdings in a variety of real estate investments, including hotels and restaurants, the corporation's Chief Operating Officer Neal Bullock said.

AMX intends to continue with a plan, previously announced by Isle of Capri, to convert the hotel's west tower into a timeshare complex. The company will lease out the management of the casino to "a prominent casino operator," Bullock said. He declined to name the operator, saying the deal isn't final.

Bullock is a partner in a San Clemente, Calif.-based company, Applied Business Services, that offers marketing services for timeshare complexes nationwide.

The west hotel tower, which has 378 rooms, will be converted into a 220-room condo property, he said. The company intends to retain the casino's 650 or so employees as well as the Lady Luck brand. It will probably hire about 120 employees to run the timeshare operation, he added.

The sale of the property is contingent upon the ability of the casino manager, which already has a state gaming license, to obtain a separate license to run the Lady Luck site, he said.

AMX partners began looking into a purchase as soon as Isle of Capri announced its intention to sell, he said. The Lady Luck afforded an opportunity to enter the Las Vegas market and help revitalize downtown, an effort that is gaining momentum, he added.

Isle of Capri said in March it might sell the Lady Luck and another casino in Tunica, Miss. that was not performing well.

A few months ago, the Las Vegas City Council approved a plan to convert the hotel's west tower into timeshares. The west tower is located across Third Street from the main hotel-casino.

The Lady Luck, which has been generating negative cash flow, has been a drag on Isle of Capri's portfolio, said Todd Jordan, a gaming industry analyst with Dresdner Kleinwort Wasserstein.

"They are in the process of getting rid of the bad apples," he said. "This is one of those bad apples."

"Even if they just closed it down, it would be an immediate positive to their cash flow and their earnings," Jordan said. "It was a no-brainer for them."

The casino also doesn't fit the company's strategy of running mainly riverboats in secondary markets outside Las Vegas and Atlantic City, he said.

Isle of Capri acquired the Lady Luck for $14.5 million in September 2000 as part of the company's purchase of Lady Luck Gaming Corp. for $400 million. It also bought four riverboat casinos in that transaction.

Isle of Capri runs 15 casinos in Mississippi, Louisiana, Colorado, Iowa, Missouri and Nevada. Shares of the company fell about 1.6 percent this morning, to $17.03.