Vegas timeshare developer could face bankruptcy

Monday, May 12, 2003 | 9:51 a.m.

A Las Vegas-based timeshare development company could be sold or face bankruptcy proceedings, the company's chief executive said in a Securities and Exchange Commission filing.

Floyd Kephart, chief executive for Leisure Industries Corp., formerly known as Mego Financial Corp., said in an SEC filing last week that reduced cash flow from lower timeshare sales, higher operating expenses and higher default rates in consumer notes securing the company's lines of credit have hurt the company financially.

The company, which operates Leisure Resorts Las Vegas, a 489-unit timeshare complex just east of the Imperial Palace hotel-casino, reported a loss of $37.4 million, $6.62 a share, on revenue of $71.8 million in the fiscal year ending Dec. 31. That compares with a loss of $4.1 million, $1.17 a share, on revenue of $102.4 million the previous fiscal year.

The company also reported that as of March 31, the company had a liability of $3.1 million for unpaid payroll taxes and that at various times, it has not had sufficient funds to cover checks and pay insurance premiums. The company's employees' health insurance coverage was canceled in April, the filing said.

To meet some of its needs, Leisure Industries raised $2 million of new capital through the sale of a debenture to Troon & Co. A company director is a partner in Troon. The company also entered a $3 million short-term loan agreement with Mathon Fund I LLC.

Company officials could not be reached for comment Friday.