Caesars sells another casino to Columbia Sussex

By Liz Benston (contact)

Monday, Nov. 22, 2004 | 10:36 a.m.

Caesars Entertainment Inc. has agreed to sell off a second casino to private hotel chain Columbia Sussex Corp. in advance of its acquisition by Harrah's Entertainment Inc.

Caesars will sell its Caesars Tahoe property to an affiliate of Fort Mitchell, Ky.-based Columbia Sussex for $45 million, a deal that is expected to close by the second quarter of next year.

Caesars in October agreed to sell its Belle of New Orleans riverboat to Columbia Sussex for about $24 million.

Columbia Sussex, one of the nation's largest privately held hotel owners, is a growing presence in the casino industry that has snapped up a number of gaming properties over the past couple of years.

Columbia Sussex owns the Westin Casuarina in Las Vegas, the former Maxim. The company also operates the River Palms in Laughlin.

After the purchase, the company would own two casinos in Lake Tahoe including the Horizon Casino and become one of only two major casino operators in Lake Tahoe with Harrah's, which owns three in the resort town.

The Caesars Tahoe and Belle of New Orleans purchases are separate transactions and are the only properties Columbia Sussex intends to buy from Caesars Entertainment, Columbia Sussex President Bill Yung said.

Yung said the company intends to rebrand the property to appeal to a "younger, hipper audience" to remain competitive in the face of stiff competition from tribal casinos in California.

"This acquisition represents a great opportunity to purchase a superior asset in a region in which we have been familiar for 14 years," Yung said in a statement.

The name of the property will change with the deal, though the new name wasn't disclosed.

Appealing to young adults, a strategy widely used in Las Vegas, isn't new to Lake Tahoe.

More recently, Harrah's Harveys casino resort has attracted a young party crowd by adding a topless revue and ultralounge as well as bar with live music and a Hard Rock cafe.

Harrah's spokesman Gary Thompson said the company doesn't expect to sell any of its three casinos in Lake Tahoe and doesn't anticipate any regulatory problems to arise with the Federal Trade Commission, which is examining the Harrah's-Caesars deal.

Harrah's responded to a second request for information from the FTC when the company bought the Harveys casino chain in Lake Tahoe. That deal ultimately passed muster in 2003.

"We have announced sales (in Indiana and Tunica) that would smooth the (regulatory) process," Thompson said. "We don't know of any other particular areas where that will be necessary."

Caesars Entertainment spokesman Robert Stewart said the transaction isn't related to or contingent upon the closing of the merger with Harrah's and is part of a process the company implemented about a year ago, prior to talks with Harrah's, when it began to sell off "non-core" assets.

Caesars announced the sale of its Las Vegas Hilton property to Colony Capital LLC in December 2003. In addition to the Belle of New Orleans sale, Caesars recently said it would sell its Atlantic City Hilton and Bally's Tunica properties to Colony Capital in a package deal with Harrah's East Chicago, Ind. and Tunica, Miss. casinos.

"This is a deal independent of the merger and is part of a plan to focus on core assets," Stewart said.

Prior to news of the Harrah's merger, analysts say Caesars had also identified the Reno Hilton and Flamingo Laughlin as properties for sale.