Friday, June 18, 2004 | 10:48 a.m.
CARSON CITY -- The new owners of the Las Vegas Hilton say it "desperately needs nourishment" to improve its performance.
Thomas Barrack Jr., founder and chief executive of Colony Capital LLC, told the Nevada Gaming Commission on Thursday the Hilton was a "fantastic project" and "we have to make the operation a success."
The commission approved the $280 million purchase from Caesars Entertainment Inc. On the heels of that approval, Caesars Entertainment early today said it has completed the previously announced sale.
Caesars said it expects to report an after-tax gain of $85 million this quarter on the sale and will use the proceeds of the sale -- estimated at $265 million after taxes -- to reduce debt.
The sale will help Caesars' business strategy to pay down debt and "focus our attention on our core assets as the center of the Las Vegas Strip," Caesars Entertainment Chief Executive Wally Barr said.
Colony is a private international investment firm focusing in real estate assets. It has 250 investors including state and private company pension funds. Barrack said "gaming was a perfect place for private equity."
"This is a one-of-a-kind asset and we look forward to repositioning this property and recapturing its luster as one of the great resorts of the world," he said.
Nicholas L. Ribis, who will be managing the property, said renovations would be done in stages, starting with the front door. It will take about six months starting in September and the gaming will not be interrupted, he said.
The new owners intend to retain all employees and have an agreement with the Hilton hotel chain to use the Hilton name until 2008. Colony also will have access to the hotel reservation system for Hilton Hotels Corp.
Colony plans $67 million in capital improvements including renovating the rooms, improving access to the casino, investing in state-of-the-art slot machines and remodeling bars, restaurants and the showrooms.
It hopes to draw more convention business.
In a statement today, Caesars said Colony "may construct additional facilities on land that is currently unused." In an interview with the Sun earlier this week, Barrack said his company will define its plans to redevelop the rest of the property within six months.
Colony formerly owned Harvey's at South Lake Tahoe but sold that. The company also owns Resorts International in Atlantic City and is a partner in Accor Casinos in Europe.
Commission Chairman Peter Bernhard questioned whether Colony might sell the property in a few years. But Barrack said the company will hold the Hilton for seven to 10 years. He said he did not expect any return on the investment for five years.
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