Wednesday, July 23, 2003
Copyright © Las Vegas Review-Journal

Net loss rises for Riviera's parent company

Recent change in stock rules may bring in new investors

Riviera Holdings Corp., parent of the Riviera on the Strip, reported Tuesday its second-quarter net loss widened. Photo by Craig L. Moran.

If the "For Sale" sign on Riviera-parent Riviera Holdings Corp. wasn't visible enough, company executives on Tuesday effectively made clear its on-the-block status, noting during a conference call with investors and analysts that they hoped recently changed corporate rules would allow significant investment in the company.

The comments came after the parent company of the Riviera Las Vegas reported a widened second-quarter net loss of $2.4 million, or 70 cents per share for the three-month period ended June 30, compared with a net loss of $1.1 million, or 32 cents per share, a year earlier.

Riviera Chairman Bill Westerman credited a recent shareholder vote to change the company's poison-pill antitakeover defense, effectively allowing ownership of as much as 35 percent of the company's shares rather than the prior 15 percent limit.

"We would hope we'd be able to attract some (new investors)," Westerman said.

Analyst questions centered on current Riviera shareholders Donald Trump as well as the Jacobs family, owners of the Gold Dust West casino in Reno as potential candidates to increase their stakes in Riviera Holdings, but Westerman said he believed neither had increased its stake since the new rules took effect July 15.

Riviera President Bob Vanucci said the citywide occupancy and room-rate drops that preceded and accompanied the war in Iraq hampered the north Strip property's performance, but noted that the market's visitor volumes, occupancy and convention attendance rebounded in June and July.

"We started to feel the effect of the war in April," Vanucci said, noting that Riviera Las Vegas reported a 9.3 percent drop in casino win, primarily fueled by a 7.6 percent drop in slot win.

Strong convention business and increased short-term Internet bookings partially offset the casino slide, Vanucci said.

"May was terrible," Westerman added. "We had some recovery in June, and our outlook is optimistic for the third and fourth quarters."

Companywide revenue in the quarter fell 2.8 percent to $48.3 million from $49.7 million a year ago.

Cash flow, defined as earnings before interest, taxes, depreciation and amortization, fell 17.5 percent to $8.6 million from $10.2 million. Cash flow is a widely used measure of casino-industry profitability.

The company also announced that the American Stock Exchange has extended its deadline for Riviera Holding to comply with the exchange's listing standards.

Cash flow at the Riviera on the Strip fell 14.7 percent to $6.4 million from $7.5 million. The hotel's occupancy was 93.4 percent compared with 95.8 percent a year earlier; its average daily rate increased $3.74 to $60.44.

Net revenue for the Riviera fell 2.7 percent to $36 million from $37 million.

The Riviera suffered a 9.3 percent decrease in casino revenues, which were partially offset by increases in room, food, beverage and entertainment revenues, Vanucci noted in a statement.

Chief Financial Officer Duane Krohn said during the conference call that the company wasn't short of capital, citing $21 million in cash and a $30 million line of credit from Wells Fargo subsidiary Foothill Capital.

The company plans to install a new slot-monitoring system and 300 ticket-in, ticket-out slot machines at its Strip property, Krohn said.

Westerman shrugged off a question about Fabrizio Boccardi, the Italian investor who made a springtime pitch to publicly pressure Riviera to sell him the company, saying Riviera bosses had had no contact with the would-be resort owner since April or March and that the subject had been adequately covered in the press.

"There's no practical way of doing a deal with him," Westerman said of Boccardi.

Riviera made its announcement before trading in the stock opened. Riviera shares closed at $5.22 Tuesday, unchanged.

Review-Journal writer Matthew Crowley contributed to this report.