Riviera parent narrows quarterly loss

The company that operates the Riviera said Friday it took a $1 million net loss in the first quarter and is continuing its efforts to avoid bankruptcy.

Riviera Holdings, which also operates a casino in Black Hawk, Colo., said its revenues in the quarter ended March 31 declined 33 percent at the Riviera and 11 percent in Colorado.

That translated into an 8 cents per share loss in the quarter. In the same quarter a year ago, Riviera lost $5.7 million, or 47 cents per share.

Company revenues fell 28 percent to $34.7 million from $48 million.

In March, Riviera Holdings said it didn't pay a $4 million interest payment that was due at the end of the month because it would have depleted the company's cash holdings, which included $7 million it needed for casino cages.

Riviera Holdings Chairman and Chief Executive Officer William Westerman said the sour economy was the main reason the company decided not to make its interest payment. He said declining room rates and reduced convention visitation have hurt the bottom line at the Riviera.

"It was necessary to retain the funds which would have been employed to pay the first-quarter interest so as to maximize our liquidity," Westerman said in a statement. The company announced its quarterly results in a statement and did not hold a conference call with analysts and investors.

The company has said it has received several notices of default between February and April and is trying to negotiate solutions with its lenders.

Westerman said the company's two casinos are generating enough cash flow to continue operating while talks continue on a restructuring plan.

"Our immediate priority is to address our untenable capital structure and with the aid of our financial advisors develop a restructuring plan with the goal of achieving a solution that either avoids the necessity for Chapter 11 proceedings or that results in a prenegotiated plan of reorganization which would be confirmed through voluntary Chapter 11 proceedings," Westerman said.

He said the Riviera has been forced to cut its hotel room rates because competitors on the Strip have reduced their average daily rates.

"The deteriorating trends in revenue and earnings experienced during 2008 continued, as evidenced by our first quarter results," Westerman said. "We expect this situation to continue as long as competitors in the Las Vegas market follow a strategy of sacrificing (average daily rates) to maximize room occupancy and the decline in convention business is unabated."

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