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twitterRiviera misses interest payment, warns of possible bankruptcy
Published Tuesday, March 31, 2009 | 9:08 a.m.
Updated Tuesday, March 31, 2009 | 4:22 p.m.
The stock of Riviera Holdings Corp., owner of the Riviera hotel-casino in Las Vegas, fell 31 percent Tuesday after the company said it chose not to make an interest payment on its debt and warned it may need to file for bankruptcy protection.
The company, which at year-end employed the equivalent of 1,137 people at its property on the Las Vegas Strip, also said the recession continued to hurt its business as it lost $12.7 million, or $1.02 per share, in the fourth quarter of 2008. That compares to a loss in the 2007 fourth quarter of $6.1 million or 50 cents per share. Revenue fell from $47 million in the 2007 quarter to $36 million in the 2008 quarter. Because of the declining revenue, Riviera has worked to cut costs and it idled one of its four restaurants in February.
Riviera, which has 2,075 rooms and suites, 900 slot machines and table games at its Las Vegas property, saw its stock tumble 45 cents to $1.02 on the news Tuesday.
Complicating matters for Riviera, the company warned its stock could be delisted from the NYSE Amex exchange if it continues to trade below $1.20 -- a development that could hurt the value of the stock by reducing its marketability and liquidity. Riviera stock traded as high as $39.12 in 2007, but has been devastated by the recession and the company's financial troubles.
Riviera also has a casino in Black Hawk, Colo., 40 minutes from Denver with the equivalent of about 200 employees. It has about 800 slot machines and six table games.
In a statement this morning, Riviera said it did not pay about $4 million in interest due on Monday for its $245 million in debt. The company is in default on its debt covenant and now must pay a higher interest rate because of its refusal to give Wachovia Bank, the agent for the lenders, control of its cash through a Deposit Account Control Agreement. Riviera argued that agreement would be too restrictive. Additional notices of default are likely now that Riviera has chosen not to make the $4 million payment.
Riviera, which has hired XRoads Solution Group LLC as its financial advisor, said it determined not to make the $4 million payment based on an analysis of its current and projected liquidity.
Riviera said it's in discussions with Wachovia about the debt as well as Riviera's disclosure that there's a substantial doubt about its ability to operate as a going concern.
"We cannot assure you that we would be successful in completing a refinancing or consensual out-of-court restructuring, if necessary. If we were unable to do so, we would likely be compelled to seek protection under Chapter 11 of the U. S. Bankruptcy Code,'' Riviera said.
"The decision not to pay our accrued interest was both difficult and unpleasant. We have always prided ourselves on paying all our obligations on a timely basis. However, in view of the continuing devastating competitive pressure on room rates, the rapidly depreciating convention attendance in the Las Vegas market, and the input of our financial advisor, we determined it was imperative and in the best interests of our company to maximize our liquidity by retaining the funds that would have been employed to pay the first quarter interest,'' William L. Westerman, chairman and chief executive, said in a statement.
"Both our Las Vegas and Black Hawk properties are generating positive free cash flow and this, combined with our cash balances, will help ensure that we continue to pay all our operating costs on a timely basis and fund maintenance capital expenditures. There will be no effect on our team members, vendors and most importantly, our customers,'' he said. ``Our lenders and the company are well aware of the necessity of resolving this situation in an expeditious manner to preserve the long-term viability and value of the company. Our immediate priority is to address our untenable capital structure with our lenders and Wachovia with the goal of achieving a solution that either avoids the necessity for Chapter 11 proceedings or that results in a pre-negotiated plan of reorganization, which would be confirmed through voluntary Chapter 11 proceedings.''
"The deteriorating trends in revenue and earnings experienced during the first three quarters of 2008 continued as evidenced by our fourth quarter results and accelerated during the first quarter of 2009. We expect this situation to continue as long as competitors in the Las Vegas market follow a strategy of sacrificing ADR (average daily room rate) to maximize room occupancy and the decline in convention business is unabated. In spite of this pessimistic outlook, we are confident that we will maintain sufficient cash flow to meet our operating obligations and maintain our properties. We expect to emerge through a restructuring with a capital structure which will enable the company not only to survive, but to grow as the economy recovers and the competitive situation in Las Vegas returns to a more rational environment," he said.
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The Sun
Locally owned and independent for more than 50 years.
Maintain their property? LOL
Chapter 11 with no impact on anyone? Contracts voided, wages lowered, and jobs lost.
Thank you President Obama, your doing a great job.
Why, yes, Neiman, President Obama has ruined the Riviera in his 60 days in office. Grow up, buddy.
Also, while growing up, check your grammar..."your" is possessive. "You're" is the contracted form of "you are."
Neiman1 Your stupidity is wearing everyone out. Obama did not change the bankruptcy laws, Bush and his administsration did. Do some research before you make a fool of yourself. Grassley(R) from Iowa headed the committee during the Bush administration that made drastic changes in bankruptcy law, for instance very few people can discharge credit card and pay day loan debt in bankruptcy any longer. Thanks Bush for your lying war that put America in the shape that it is in. Don't be surprised if Bush and his thugs are not indicted in the near furture. A federal judge ruled they can be investigated and Spain will seek arrest warrants.
Only an idiot would blame a casino bankruptcy that was years in the making on anyone but Bush. You qualify. At some point you parents should take your computer away and let you play with something else.
Another casino deadbeat that can't pay their marker?
Arrest the bastards, confiscate their house and put it up for auction.
LOL
i think neiman would find a way to blame obama for the titanic sinking.
anyway, the riviera is a DUMP. probably THE worst looking resort on The Strip.
it's got a classic brand name, but it's cheese-city.
Some Kool Aide drinkers will still think none of this is Obama's fault until they lose their job.
Neiman1 PLEASE GET OVER YOUR PROBLEMS WITH OBAMA. HE HAS NOTHING TO DO WITH IT. VEGAS' PROBLEMS ARE DEEP ROOTED AND GO BACK YEARS.
I do have to say that I enjoy reading the comments in the Sun like NEIMAN1's because it make me realize there are still idiot Americans out there that do not know when to shut their mouths. Thank God I live in California.
I just spent the past week in Vegas attending a convention at the Riviera. It was cheaper for me to stay at the Encore (which is what i did). Want to blame the Encore for the cash problem at the Riviera?
I give Obama credit for his superb use of the teleprompter. Is he too stupid to speak without one? Here is a guy that never held a job as prez. I thought Bush was bad. This guy is a joke. But I cant blame him for the Riv.'s problems, it the fault of all who post here for being so cheap. Dont you guys have a shift at Wendy's to go to?
To everyone reading these posts... Neiman1 has a whole case of Obama Hateraid which the routinely drinks daily. As he himself will tell you if the sun dosen't come out tomorrow it will be President Obama's fault. Also, It will be sad to see the Riviera go under. There are precious few of the old grand ladies on the strip. We need some to stay around to speak to the culture of our town.
Not only is neiman1 not too bright, but Harley & laguna are not far behind him.
There are a biased people on here on all sides of the fence, nothing new for an anyomous website.
In the case for the Riveria, they spent unwisely on buying some property around the property instead of paying off the tower they built what seems like foever ago. The beach night club was a very popular place which they shut down. In any case the property will continue operating, they are just going to do what probably will be a much repeated process, chapter 11 bankruptcy and telling their debt holders to go to he11...
No matter what people think. Business is Business. You either restructure or close. The Riviera should do itself a favor, CLOSE!!! Do Las Vegas a favor. All the rest of the dinosaur resorts are gone, it's time for you.
I say turn the Riviera and others in similar financial condition into brothels. or maybe metro can use all the busted hookers and pimps as a show at one of these places, I'm sure business would pick up. Maybe put the pimps n hookers in a cage and charge people to throw water balloons at them.
I thought you all knew!! According to Neiman1, Obama is responsible for EVERYTHING wrong in Vegas including the $82M less that the county will receive in property taxes this year.
Another casino deadbeat?
Today Hooters on Tropicana said they couldn't make a $141 million payment to creditors.
Hooters has a 30-day grace period and have hired a finance company to devise a payment game-plan.
If you've ever noticed, Neiman1 has YET to make a comment about something where he doesn't blame Obama. Where was all this smack talk 90 days ago before Obama was president and LV was still facing its issues?
But again....you can teach an old dog new tricks, but you can't teach a dumb dog nothin!!!
Personally I would like to see the Boyd's Corporation close down. Their hotels are really nasty.
If the "other" Mob was running the town there would be lot's of jobs, free-flowing booze, and prettier girls serving drinks.
this town is like a indy race car that hits a wall.
it goes a few hundred feet down the road, then finally comes to a stop, but the car is ruined.
that's vegas right now.
wow vegas is falling... down a pit...Lets face it people are to afraid to say they are racist so they just turn the hate on blame everything on obama my own mother still believes bush was a decent man....i gues now would not be a good time to hit the slots at the Riviera