Click for printable version
Click to send to a friend

Wednesday, May 23, 2001
Copyright © Las Vegas Review-Journal

Peccole Nevada named Regent's preferred bidder

Bankrupt resort's executives choose Las Vegas developer

Regent Las Vegas executives have chosen a $150 million bid by real estate developer Peccole Nevada Corp. as the best offer to buy the bankrupt Summerlin hotel-casino, property officials said Tuesday.

The bid by Peccole, developer of the Peccole Ranch master-planned community in northwest Las Vegas, still must be approved by the federal judge handling the Regent's bankruptcy case.

The move could pave the way for construction of a time-share development on the Regent site, said a source familiar with Peccole's operations.

Kent Barry, director of commercial development of Peccole Nevada, failed to return phone calls seeking comment Tuesday evening, but an afternoon statement released by the company explained some of the thinking that went into its bid.

"The Regent Las Vegas is the premier off-Strip property in the valley," Barry said in the statement. "With this offer, we look forward to playing a key role in its successful operation to the benefit of the employees, creditors and the local community."

The Regent opened in July 1999 as the The Resort at Summerlin after a series of construction delays, and was immediately plagued by poor foot traffic.

Its targeted high-end clientele failed to materialize in numbers sufficient to make interest payments on the debt issued to finance what has become a $365 million investment on the part of property owner Swiss Casinos of America.

The Regent filed for Chapter 11 bankruptcy protection in November. Meantime, executives have attempted to transform it into a locals gaming property by lowering food prices, opening a 24-hour coffee shop and aggressively targeting local gamblers with promotions.

Despite the changes, the property continues to generate negative cash flow.

The preferred bid saw Peccole Nevada join with Heller Financial, a Chicago-based finance company traded on the New York Stock Exchange, to offer $85 million in cash, $25 million in notes and $10 million in preferred stock for the Regent. Peccole Nevada and Heller would also assume leases and other financial obligations valued at about $30 million.

Heller executives were unavailable for comment Tuesday evening.

"We feel like the offer is reasonable and fair," said Lanis O'Steen, the Regent's chief restructuring officer. "It maximizes the opportunity for creditors to recover what they're owed."

O'Steen declined to name what he said were nine other bidders for the Regent.

A Wall Street financial analyst said at $150 million, the Peccole offer is sensible in light of the value of the property's two upscale hotel towers with 541 rooms, casino, restaurants and health spa.

"I think you can operate it as is and make money," said Andrew Zarnett, a Deutsche Banc Alex. Brown casino industry analyst. "There's always the option in the future to sell one of the hotels.

"I would imagine (Peccole is) relatively shrewd in terms of real estate values."

Developer Bill Peccole acquired 3,000 acres in 1949 that, in part, became Peccole Ranch, which has an estimated 10,000 residents. His Peccole Nevada went on to build Las Vegas' first shopping mall, the Charleston Mall.

Peccole, who died in December 1999, also developed the high-end Canyon Gate country club, along West Sahara Avenue.

"They've entertained thoughts of developing time-share properties," Richard Lee, public relations director for First American Title Co. of Nevada, said of Peccole Nevada.

A source familiar with Peccole's operations said the development company would likely find an experienced hotel-casino operator to run the property.

"It's a gorgeous property," said the source who requested anonymity, "and Peccole may just want the real estate."

Regent executives were set to file a motion in U.S. Bankruptcy Court identifying Peccole as the preferred bidder. A hearing is scheduled for June 18 for creditors to comment on the bid. If Bankruptcy Judge Robert Jones accepts the offer, he would set terms for others to deliver stronger bids.

With the first bid in the process, Peccole's offer is known as a stalking horse bid. If Jones accepts that offer, other bidders would have to top it to buy the property.

To account for any disadvantage that comes from making the first bid, a stalking horse is often granted the right to match subsequent bids.

The bankruptcy judge is expected to allow about four weeks for additional bids, O'Steen said, with the court's selection of a winning bid coming by mid-July.

If Peccole wins, O'Steen expects a sale to be completed by October.