VEGAS INC Magazine - Latest Las Vegas business news, features and commentaries about gaming, tourism, real estate and more
Issue link: https://www.ifoldsflip.com/i/41819
IN BUSINESS COURTS CREDITOR SAYS HOOTERS BRAND HAS FAILED AS A CASINO By Steve Green senior staff writer The main creditor of the bankrupt Hooters casino resort says the brand has failed in Las Vegas and it's time for management to give up on seeking a white knight to bail out the property. The creditor is Canpartners Realty Holding Co. IV, an affiliate of investment company Canyon Capital Realty Advisors of Los Angeles. Canpartners filed papers in U.S. Bankruptcy Court in Las Vegas opposing plans by Hooters casino to spend potentially hundreds of thousands of dollars looking for capital, a merger partner or a buyer. Canpartners says the property is worth about $70 million. Yet it's encumbered by debt totaling more than $180 million, at least on paper, and Canpartners holds the vast majority of that debt, the creditor said in its filing. Hooters, however, regularly points out that Canpartners acquired much of that debt at a deep discount— an argument intended to give it leverage against Canpartners as a debt investor. The amount of that discount hasn't been disclosed. Plans by Hooters to hire Innovation Capital LLC of El Segundo, CA, to find money for the property or a buyer would result in a waste of time and potentially hundreds of thousands of dollars of Canpartners' cash collateral held by the resort, Canpartners complained. Besides Hooters paying Innovation $35,000 per month, Innovation could earn hundreds of thousands of dollars in "exorbitant" success fees—including fees that may be payable even if Canpartners forecloses or a transaction is consummated with an investor not brought to the table by Innovation, Canpartners complained. "Over the past three years, the debtors, with the help of an army of high-priced restructuring professionals and financial analysts, including (law firms) Gordon Silver, Greenberg Traurig LLP, (and advisors) Jefferies & Co., Alvarez & Marsal, Innovation and Gaming Research Inc., have spent more than $3 million attempting to negotiate or otherwise effectuate a reorganization, sale, capital raise or other restructuring transaction outside of bankruptcy. Despite years of opportunity, massive expenditures and substantial legal and financial advisory firepower (more firepower than likely was warranted), the debtors' efforts bore no fruit," Canpartners complained in its filing. "There is thus simply no need to spend anymore time, or anymore | 12 SEPTEMBER 2011 | LOWER THE OVERHEAD UNDER YOUR FEET. MEMO FROM THE TOP: CUT BACK YOUR WATERING SCHEDULE TO 3 DAYS A WEEK. IT LOWERS YOUR WATER BILLS AND KEEPS YOUR GRASS GREEN AS THE SEASON CHANGES. changeyourclock.com of Canpartners Realty's money, on a redundant advisor, who will seek to undertake a lengthy process that has already been completed." Canpartners also complained that efforts to market under the Hooters brand are a waste of time, as consultants found three years ago that the property should be rebranded because: n The Hooters brand limits the property's ability to capture its share of the market. n Most potential visitors to Las Vegas would be more inclined to stay at the property if the Hooters name was replaced with a three or four-star nationally recognized hotel brand. n The Hooters brand does not resonate with female visitors, who are the primary decision makers when choosing a Las Vegas hotel. Canpartners also said consultants reported in December 2008 the property needed $40 million in renovations. 15 073632.01_ref 056879_SNWA_Compliance Lower The Overhead_Vegas Inc._9/5_Print_Jr Pg 7.46" x 7.5"_InDesign CS5_Fonts: Univers (T1) 93 Extra Black Extended, Helvetica Neue_4C_AD: DV_GA: Dorcus 8.23.11; tom 8/24/11 loaded