Gaming Control Board tentatively OKs financier’s purchase of Riviera

Financier Barry Sternlicht wasn't ready to commit Wednesday to a full-on redevelopment of the aging Riviera.

He told Nevada gaming regulators, however, he plans to celebrate the heritage of the 55-year-old Strip resort, which his company is acquiring out of bankruptcy.

The Gaming Control Board gave tentative approval of Sternlicht's purchase of 2,075-room Riviera, which was restructured in a Chapter 11 filing with the U.S. Bankruptcy Court.

Sternlicht will control 79 percent of the Riviera while longtime Riviera investor Derek Stevens, who owns 50 percent of the Golden Gate, will own the other 21 percent.

The deal completes a two-year quest by Sternlicht to get control of the Riviera, which went into bankruptcy following the death of former chief executive William Westerman last April.

The landscape on the north end of the Strip changed during the time Sternlicht began seeking ownership. Boyd Gaming Corp. halted construction on Echelon, the site of former Wet 'n Wild water park was never redeveloped, and the Fontainebleau project went bankrupt.

What was a real estate purchase quickly became a restoration project.

"We didn't expect the Fontainebleau to turn into a giant blue smokestack," Sternlicht said. "There's a lot we can do with Riviera physically. We can't get in there a moment too soon."

Andy Choy, who will serve as the Riviera's chief executive officer, told gaming regulators the new management team will leverage the property's historic roots as one of the original Strip resorts.

He said the public areas, including the casino floor and restaurants, would be revamped and spruced up with a new look.

A complete property redevelopment will be drawn up but placed on indefinite hold until the market recovers.

The new Riviera, Choy said, will target out-of-town visitation while looking to lure group business to its convention center.

"We plan on spending capital judiciously," Choy said. "We do not feel new hotel towers are best for the Riviera at this time."

Sternlicht, who has previously owned the Aladdin, Desert Inn and Caesars Palace, told the control board the Riviera now has a much more manageable debt load.

The bankruptcy reorganization removed $262.1 million in debt. The new capital structure includes loans of
$50 million and $20 million and a $10 million working capital agreement.

"It is an iconic asset and we need to figure out an inexpensive way to bring it up to task," Sternlicht said.

The Riviera is expected to emerge from bankruptcy by the end of the month if the Nevada Gaming Commission signs off on the acquisition March 24.

Sternlicht, Stevens and other Riviera management will still need to licensed by Nevada gaming regulators.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.