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Riviera Holdings Continues Talks with Creditors as $13.5 million Loss Reported

By Arnold M. Knightly, Las Vegas Review-JournalMcClatchy-Tribune Regional News

Aug. 11, 2009--Riviera Holdings Corp., which reported widening losses in the second quarter, said it is still in talks with its creditors about its future, the company announced this morning.

The company, which owns the Riviera on the Strip and a casino in Colorado, posted a net loss of $13.5 million for the quarter ended June 30, a sharp swing from the $10 million profit recorded for the same quarter last year, according to a Monday filing with the Securities and Exchange Commission.

The result translated into an earnings loss of $1.08 cents per share in the quarter, down from 80 cents per share profit a year ago.

The loss drives the company's six-month loss to $14.5 million this year.

Because of its financial problems, Rivera did not pay a $6 million interest payment in the second quarter, but said today it is still talking to creditors about restructuring its debt. The company, however, cautioned it could still end up in bankruptcy.

"With the aid of our financial advisers and outside counsel, we are continuing to negotiate with our various creditor constituencies to refinance or restructure our debt," the filing said. "We cannot assure you that we will 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."

The company skipped a $4 million payment in March when it entered into talks with Wachovia Bank about restructuring its debts.

Riviera Holdings has $276.1 million in long-term debt, $245 million of which is a credit facility with Wachovia. The company has received multiple defaults notices on its debt this year.

The company's today reported its loss from operations in the second quarter was $600,000, a drop from the $5 million in net income realized the same time last year.

Revenues declined 24 percent to $34.6 million in the quarter, down from $45.6 million last year. Revenues for the year have dropped 25.9 percent to $69.3 million from $93.6 million.

Second-quarter cash flow, defined as earnings before interest, taxes, depreciation and amortization, fell 62 percent to $3.2 million from $8.6 million in 2008. Cash flow the first six months is down 54.5 percent to $8.5 million from $18.7 million.

At the 2,075-room Riviera on the Strip, revenues declined 27.9 percent to $24.9 million from $34.5 million in the quarter. Casino revenues fell 16.6 percent to $12.3 million in the quarter.

Quarterly room revenues dropped 36 percent from $13.6 million to $8.7 million as demand from conventions "decreased substantially due to the effects of the ongoing recession and increased competition," the filing said.

Occupancy dropped sharply in the quarter to 76.5 percent with an average daily room rate of $58.02. Last year, the property saw 84.6 percent of its available rooms filled with average rates of $90.53 in the second quarter.

Convention business only accounted for 19.6 percent of the occupied rooms in the quarter, down from a 42.8 percent share at the same time last year.

"We believe that due to a number of factors affecting consumers, including but not limited to a slowdown in global economies, contracting credit markets and reduced consumer spending, the outlook for the gaming and hospitality industries remains highly uncertain," the company said in the filing. "High travel costs have resulted in fewer visitors coming to the Las Vegas and Black Hawk markets, resulting in lower casino volumes and a reduced demand for hotel rooms. Based on these adverse circumstances, we believe that the company will continue to experience lower than expected hotel occupancy rates and casino volumes."

Also in the second quarter, the company delisted itself from the American Stock Exchange and is now traded on the Pink Sheets under the symbol RVHL.

The stock was trading at 48 cents per share early Monday, up slightly from Friday's close of 44 cents per share.

The stock hit an all-time high of $39.12 on June 20, 2007, because of buyout rumors and speculation on the value of the Riviera's 26-acre site.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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Copyright (c) 2009, Las Vegas Review-Journal

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