An Update on the Riviera Bankruptcy Plan
September 2nd, 2010 | Published in Casino News
The Riviera Las Vegas is set to receive new gaming equipment, compliments of their parent company’s reorganization plan. With $291 million in debt and outstanding liabilities, Riviera Holdings Corporation filed bankruptcy with reorganization on July 12th, 2010. This includes their Las Vegas and Colorado locations.
Their Savior
The Riviera Holdings Corporation is being bailed out by investors. Hotel and gaming guru Barry Sternlicht of the Starwood Capital Group has acquired most of the debt and plans to save the company.
The Numbers
In the second quarter of this year, the Riviera Holdings Corporation lost $4.2 million vs. a loss of $13.5 million just one year ago. However, revenue was down slightly over $2 million. These loses can be attributed to their isolated location at the Northern end of the Las Vegas strip in addition to the economy. With an abundance of hotels rooms and expo center space, all gaming properties are struggling.
During the past economic boom, each acre on the Riviera’s property was worth $30 million. This has significantly declined to $6 million per acre. This is attributed, once again, to their location as well as a lack of development of the surrounding area.
Recent Announcement
This past Friday, the company announced that they are planning to conserve cash with little investment in capital improvements. New, small improvements include, window treatments, exterior paint, exterior and interior signage improvements and elevator upgrades. Other improvements include, new slot machines and gaming software and hardware. These will be applied to both of their locations.
The Reorganization Plan
The proposal includes replacing its $291 million in debt with a $50 million term loan and possibly another $30 million. After the company emerges from the debt, it will be worth $216.5 million.
Projections
Maintenance and spending will jump from $3.6 million in 2010 to $9 million by 2015. Also, net revenue is expected to increase to $140 million by 2011, $145 million by 2012 and $171 million by 2015. Interest will resume once they emerge from debt will cause the company to lose additional money until 2015.
Many casinos are opting for bankruptcy with reorganization. Like in sports, the casino industry is experiencing a few rebuilding years. They will remain in decline then emerge stronger than ever. Once the Riviera and other properties are able to reinvest in capital projects and improvements, they will become quite the spectacle.