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Tuesday, July 13, 2010 | 6:13 p.m.
Sun Archives
- Riviera files for Chapter 11 bankruptcy reorganization (7-12-09)
- Riviera stays mum on report of Starwood takeover (3-26-10)
- Riviera loses $4.5 million, says bankruptcy possible (3-17-10)
- As earnings fall, Riviera unsure if bankruptcy can be avoided (11-9-09)
- Riviera skips another interest payment (7-8-09)
- Riviera misses interest payment, warns of possible bankruptcy (3-31-09)
Map of The Riviera
The Riviera
2901 S. Las Vegas Blvd. , Las Vegas
Deep-pocketed Starwood Capital Group is participating in the takeover of the Riviera hotel-casino on the Las Vegas Strip and its sister casino in Colorado, an attorney confirmed Tuesday.
Riviera Holdings Corp., owner of both properties, filed for Chapter 11 bankruptcy reorganization Monday in Las Vegas and said at that time its reorganization plan was supported by holders of more than two-thirds of its $247.7 million in debt under its June 2007 Senior Credit Facility.
Those debt holders include Starwood Capital, Gerald Gordon, an attorney with the Las Vegas law firm Gordon Silver representing Riviera Holdings, said Tuesday.
Starwood Capital is headed by longtime hotel industry executive Barry Sternlicht, known in Las Vegas for running Caesars World during the late 1990s.
Caesars World, including Caesars Palace, was sold in 1999 to Park Place Entertainment Corp., which was later taken over by Harrah’s Entertainment Inc.
Sternlicht, known for developing the Heavenly Bed at Westin Hotels, hasn’t yet commented publicly on the Riviera deal.
He’s known as an entrepreneurial real estate investor, most recently raising $3 billion during the last two years for investments including acquiring the real estate loan portfolio of the failed Corus Bancshares. That portfolio includes troubled Las Vegas condominium projects One Las Vegas and Streamline Tower.
Bloomberg News reported in March that Sternlicht had said Starwood Capital and other investors had bought control of Riviera’s first mortgage for about 50 cents on the dollar and was leading creditors negotiating a pre-packaged bankruptcy.
Gordon said Tuesday that the debt holders, which include Starwood and other investors, had agreed to exchange their debt for a controlling equity stake in the Riviera and to provide $10 million to $30 million in financing to the company.
Terms of the deal call for some $220 million in debt owed by the Riviera to be extinguished, leaving it with about $50 million in debt, Gordon said.
Besides the $247.7 million owed under the credit facility, the company owes some $27.9 million under a securities hedging contract.
Riviera has been deferring needed maintenance to conserve cash, and its operations have been largely unaffected by the bankruptcy filing.
"The company will continue to operate," Gordon said.
"Through bankruptcy, the company anticipates that it will be able to restructure its indebtedness, provide for investment of new capital into the company and emerge in an improved financial and operational position," Riviera said in a statement Tuesday.
Stockholders will likely see no return on their investment in Riviera, the company noted.
"The company's management strongly believes that any recovery for equity holders in the Chapter 11 process is highly unlikely, and under the terms of the restructuring and lock-up letter agreement (with debt holders), the equity holders' interests in the company will be cancelled and will receive no distributions," Riviera said in its statement.
"By agreeing with our secured lenders in advance, we will be able to proceed with an expeditious restructuring through bankruptcy which will provide us with a viable capital structure, as well as additional financing," said Tullio Marchionne, secretary and general counsel of the company.
"We, like many others in the gaming industry, have been affected by the current economy. However, 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 employees, vendors, and most importantly, our customers.
"Furthermore, our ability to reach a mutual agreement with our lenders as to the restructuring provides us with a great advantage that most debtors in bankruptcy are not so fortunate to have. It is our expectation that the Chapter 11 cases will proceed before the Bankruptcy Court in a prompt manner. We believe that by restructuring our debt in coordination with our lenders we will emerge with a capital structure which will enable the company not only to survive, but to grow as the economy recovers," Marchionne said in the statement.
The Riviera lost $4.5 million on revenue of $30.8 million in the first quarter.
In court papers, attorneys for the company said the 2,075-room Riviera Las Vegas has been hurt by declines in convention attendance to Las Vegas and the property’s increasing isolation, worsened by the shutdown of construction at the adjacent Fontainebleau resort as well as the nearby Echelon resort.
"One of the primary challenges Riviera Las Vegas faces is its increasing isolation given the recent changes along the north end of the Strip. Only a few years ago, Riviera Las Vegas was immediately surrounded by established and legendary casino properties such as the Stardust, the New Frontier and Westward Ho. During the recent economic boom, those properties and several other North Strip hotel and casino properties were sold and demolished to make way for new high-end resorts. However, as the economy rapidly declined, these anticipated new projects either halted construction or failed to start altogether," a Riviera bankruptcy filing said.
With the only big operating properties nearby being Circus Circus, the Sahara, the Stratosphere and the Las Vegas Hilton, the Riviera has seen steep declines in walk-in traffic.
"Riviera Las Vegas has always relied on walk-in traffic by capitalizing on its Strip location, and its close proximity to several major casino properties as well as the Las Vegas Convention Center and several timeshare and condominium projects. Not only has walk-in traffic diminished due to the reduction in casinos and other attractions along the north end of the Strip, but any remaining foot traffic near Riviera Las Vegas is further reduced due to inaccessibility to the property due to construction hazards at nearby properties, streets or walkways," Riviera’s filing said.
Despite these challenges, the company remains cash-flow positive – meaning that slashing its debt through the bankruptcy process may enable Riviera Holdings to ride out the recession.
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I am going to say this, I am sickened by the demise of the Northern Strip by Boyd tearing down the Stardust, The sale and destruction of the Frontier, the demolition of the Algiers, La Concha, and El Morracco, Del Mar, and other places which gave so much character to this area. It is now a steel and concrete graveyard, all that history, and character destroyed by greed and narcissim..
Business is business. If "environprotector" owned that property he or she would do whatever was necessary to gain a maximum return. There is no room for nostalgia in a city of tomorrow.
environprotector
The strip will never be as it was.
Well there is always downtown or disneyland.
Downtown is where it all started and will end.
Goodman is trying new things downtown,
I hope it works.
He has to perserve is legacy.
Time will tell
(Sun) what % of people visit downtown,not stay but visit?
I agree with environprotector, as usual.
With gaming available in most states now, Vegas needed something to set it apart. The classic casinos reminding us of a bygone, less corporate, age are now gone, replaced by all day pool parties filled with drunken idiots. Vegas is over.
If Starwood is successful, it should put in new Management and renovate. This Management team has been out of touch for the past decade and a half. However, the former Chairman was paid an extraordinary amount of money for 18 years when the property was struggling. Come in with a broom, and a bucket of paint...replace the Board of Directors.
Environ;
I have disagreed with you over the fate of the Riv however I agree that the death of the hotel would be a negative hit on the "look of the Strip". The neon facade that fascinated me from my first trip to Vegas is slowly dying, and with it the mystique of the city's aura.
environprotector - Your sickened by the demise of rent by the hour Del Mar? Hmmmmmm........
@newman2:
Yes, man, you are damn right about the RIVIERA passing away... Entering the RIVIERA I can still hear Sinatra sing: "..This Town ...".
@ep:
But look on the bright side: You can still remember how much better it used to be in Vegas and nobody can ever take that away from you.
@wolf:
Wife and me always go downtown, when we visit Las Vegas, but we mostly stay on the Strip for the night and to enjoy the big casinos as well. We are just simple tourists on our Vegas Vacation having some fun.
Regards
Banana_Joe
The Sahara sure keeps a low profile.
That joint must be losing money hand over fist.
No doubt SBE and their partners rue the day they bought that place.
Implode.
blowing up the stardust was a huge mistake by boyd and i would have kept the frontier open too but lets be honest here the north strip has been a graveyard for decades, the el rancho lay rotting on the strip for a full decade before it came down in 2000, i remember on my first visit to vegas what a horrible eyesore that was
they just ain't making money up there, look at sahara closing down their buffet and two of the hotel towers, circus is the only place in the black up there, even wet and wild didn't work out
I still say knocking to the 'Dust and having the FB and Echelon stalled is killing that end of the strip. I would wait and see if and when FB and Echelon would be restarted before I would tear down the Riv and build something new.
It is sad when Wall Street runs the strip. The new mob. The ol days of coming to vegas because of value is gone. The bait and switch technique in full force. Get a cheap room, buy a beer for 8. Solicit non corporate and non unionized properties. It will be a much more memorable experience.
I always feel like a moron when I try to understand how the bankruptcy process unfolds in America. The issues just seem too complex.
It sounds like the Riviera will be profitable if the bankruptcy takeover is approved and the debt thereby reduced to a reasonable level.
Certainly the Riviera still has a loyal following. A former mayor of Belleville and her friends still go there at least twice and year and love it.
Once Fontainbleau is up and running (please hurry Mr. Ruffin), and foot traffic gets back to normal, the northern area of the Strip will be booming again.
Times have changed. The old resorts simply cannot compete with the newer ones unless they are willing to spend the money to make significant expansions, renovations and reinvent themselves the way The Tropicana is. Unfortunately, it is too late for the Sahara and Riviera to do this. These hotels are in an underdeveloped and unpopular location on the Strip. Starwood will eventually implode The Riviera and build something new or sell the land to Steve Wynn. He is looking to build a third hotel someday...you can quote me on that. It is already on the drawing board. He knows Fountainbleu with Carl Icahn's ownership will be intense competition for him once it opens. With The Sahara and Riviera gone, the North End of the Strip will be revitalized by Starwood Group, Wynn and Icahn someday.
LasVegas9, you make some sense, except for the fact that that if the Sahara and Riviera "are in an underdeveloped and unpopular location on the Strip" then why would Starwood and Steve Wynn care about the properties? Fact is, SOMEONE will eventually turn this section of the Strip around, either by imploding and rebuilding, or by doing full renovations ... Whichever pencils out better. (and, of course, when Fontainebleu completes; if anyone wonders, there IS work being done on Fontainebleu daily)
I really hope Starwood and Sternlicht can breathe some new life into the property.
The place isn't "bad" per se, but it hasn't kept up with all the bells and whistles (and glamor) found at the newer places in Las Vegas.
It just needs an infusion of cash to make parts of it over and a management team that really knows what they are doing, in order to make the place a viable destination again.
'Once Fontainbleau is up and running (please hurry Mr. Ruffin)" ....... umm,you know something we don't?
I hope this works. The north end is dead. If Riviera becomes a parking lot all that will left will be circus circus.
i had a restraining order filed (and granted) against an attorney at that law firm.
It is really not too late for Strip North. It is probably too late to have a 3-pronged Vegas attack of High-end South Strip, Medium-end North Strip and Low-end Downtown (or some variant in-between mixture), but Strip North can be saved with renovation and revitalization, NOT IMPLOSION and rebuilding. Tropicana is proving it can be done. If Circus Circus, Riviera and Sahara (and Slots-a-Fun) renovate, they can be highly complimentary and competitive to the Fontainbleu; and a moderately designed/priced Echelon Place could be a welcome addition to the neighborhood.
Old Vegas may surely be gone... but some of it's ambience and enjoyment can be captured with renovated, refurbished Strip North venues.
No more implosions or high-end building for Strip North; it can yet be a viable, desireable area for vacation dining, gaming and sleeping.
I think it is a shrewd move by Starwood to get the Riv now. That end of the strip will come back when FB and maybe Echelon are done. This way they can buy the land (which is prolly all they really want) as a place marker before some one Mr Wynn buys it.Get it now when that end of the strip is down.
THE "INDIAN'S" DID IT. DUH!
FREE-FOOD-SLOT PLAY AND NO HOTEL BILLS IN THE MORNING.
This is a black op by rogue multinational corporations. They caused the deterioration of our city so that they could purchase our hotels for pennies on the dollar. In all cases, the shareholders are screwed out of their rightful money thru the process stated above. Associate corporations(Carlyle Group) funding the Fountaine Bleau stopped funding in order to delapidate the area & have their buddies come in w/ no competition & buy at the lowest price. It is called "Club deals" & a precedent has already been set for Harrah's shareholder's losses. No class action lawsuit. Thing is, the DOJ Anti Trust Dept. chief, R. Hewitt Pate defended these corps for one appearance only when out of office. Investigation occurred while in office. Case # 06 CV 13210. Take a look at the suit, then look at Docs # 24 & # 31. This was a set up so that any future people who tried to sue would be a member of the class that did not go forward.These corporations have no loyalty to the US-in fact, they & their Wall Street buddies & financial terrorists are responsible for all of our misery.
ezr2c.... you might want to lay down the crack pipe for a while.
Mr. Wynn still has well over 100 acres to build on. Have a feeling he will not have any use for the Riv.
Liked old Vegas but people complain about the old then complain when they blow them up. Loved the Stardust but it just was not making what a new place can in the same place. Have to let the owners build what works for them. It is their money and land.
Well put James. Environ - Maybe there is room for nostalgia...just not on the Las Vegas Strip. Go downtown if you want nostalgia. Or pick up a book.
The court documents speak for themselves. L-1 Identity Solutions has taken over production of our Licenses at the DMV. They employ 6 lobbyist companies & they are a Fortune 500 multinational defense corporation.We could not produce a more expensive Dr. License if we tried. Maybe that is what the Governor is hiding. He is the one who claimed emergency conditions & brought them into the picture. Instead of funds for Nevada uses, this corp. w/ no loyalty to the USA is paid in huge Govt. Contracts AND DMV fees.They say mailing them to us is for security...if so, mailing them out during the worst foreclosure crisis we have seen negates this. No way to know if you will still be at that address in the 10-30 days allotted to mail it to you.If I am in front of you w/ extra documentation, the safest procedure would be to give it to me in person-minutes after my photo is taken.No crack pipe here, a group of local, critical thinkers are paying close attention.Even Steve Wynn has stated that he is actually worried over the state of Las Vegas & the unreal events currently occurring. Fake lawsuits against long time Vegas properties (Harrah's)to bring down their value, is highly suspect. You see, the health of those hotels affect the health of our schools, which in turn affect our children.Our Education Budget is on life support.And, as long as those buildings are standing, there is always the chance of a free room comp(the ultimate player reward for locals), or winning our money back. New owners ALWAYS tighten the machines.Bad news.
Want to know if anyone received notice from the Riveria regarding their bankruptcy. I received notice about it, but that usually only goes to creditors, right? I thought maybe just because I had previously stayed there was why I may have received it, however, others that have stayed have said they did not receive a formal notice. Trying to find out why I might have. (I didn't think it was anything, so I threw away the notice I received). Help???