Another Las Vegas gaming company could soon file for bankruptcy protection. The parent company of the Riviera announced Tuesday it has missed a key interest payment on debt and may not be able to continue its operations.
In a statement, the company says, at least for now, there will be no impact on employees or customers. The doors will remain open and it will be business as usual.
The Riviera first opened on the Las Vegas Strip in 1955, and has undergone a series of expansions in its more than 50 year history. But the economy is taking its toll, with the company opting to skip a $4 million interest payment and announcing it may file for bankruptcy protection.
In a statement, CEO William Westerman says, "The decision not to pay our accrued interest was both difficult and unpleasant.
"There will be no effect on our team members, vendors and most importantly our customers."
Professor Keith Rowley of UNLV's Boyd School of Law says a Chapter 11 bankruptcy filing would allow the company to renegotiate debts with its creditors.
"Bankruptcy itself should not instill fear, and for employees probably should give a little bit of comfort," he said. "It can keep doing business and keep employing those employees and keep the doors open to those customers and keep providing a revenue stream for the tax base."
The Riviera says it lost $12.7 million in the fourth quarter of 2008, and in part blamed lower room rates.
The company says its financial problems will continue, "As long as competitors in the Las Vegas market follow a strategy of sacrificing (room rates) to maximize room occupancy and the decline in convention business is unabated."
Grant Govertsen is a gaming analyst with Deutsche Bank, "As the Excaliburs and the Circus Circuses lower their room rates to attract customers, it puts even more pressure on a casino like the Riveria. So it is not overly shocking as one of the reasons why they did not make their interest payment."
The parent company of the Riviera employs about 1,500 people in Las Vegas and at a casino outside of Denver. Riviera's stock fell 30-percent on Tuesday's news, closing at just over a $1 a share.
