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Best of Howard Stutz

Gaming Guru

Howard Stutz

Financially troubled LVH to get new management

30 August 2012

LAS VEGAS -- The financially troubled LVH will gain new management under an agreement reached between the 3,000-room hotel-casino's largest creditor and a court-appointed receiver who has been operating the property since January.

Employees of the off-Strip hotel-casino were notified Wednesday through the Worker Adjustment and Retraining Act that a foreclosure sale of LVH would be held in November. The federal act requires companies to notify employees and union representatives of an impending plant or business shutdown.

However, the LVH operators are not planing to cease operations. The notice was termed a "technical step" by one source because it will allow the property's employees to be rehired under new management.

A joint venture between Gramercy Capital and Goldman Sachs Mortgage Co. LLC, the current lender of the property, is expected to bid for LVH in the foreclosure sale.

"Our intention is to keep the property going," said a Goldman Sachs source who asked not to be identified. "The intention is for the lenders to purchase the property in foreclosure and continue to operate the property."

Several sources said Las Vegas-based Navegante Group would take over operations of LVH's hotel and casino after the sale and approval by Nevada gaming regulators. Employees of LVH would then become employees of Navegante.

LVH employs more than 1,800 workers.

"Although no one can guarantee the outcome of the foreclosure sales auction, LVH is in the process of preparing paperwork necessary to transfer employees from the old company to the new one, assuming the joint venture of Gramercy and Goldman is successful in acquiring the assets of the property," LVH spokesman Kurt Ouchida said in an emailed statement.

Navegante operates the Hooters Hotel and four properties in Elko. Until last year, the company managed the Grand Sierra in Reno and the now-closed Sahara.

Navegante Chief Executive Officer Larry D. Woolf declined to comment on the LVH on Wednesday.

Ouchida said LVH has booked group and convention business for 2013 and beyond.

LVH, formally LVH-Las Vegas Hotel & Casino, has been in receivership since last September. The hotel-casino was known as the Las Vegas Hilton until January, when Hilton Worldwide ended the agreement that allowed operators to use the Hilton brand.

Billionaire financier Kirk Kerkorian built the hotel in the 1960s and called it The International. He sold the property to the Hilton Corp., which expanded the hotel to 3,000 rooms.

The Las Vegas Hilton was known worldwide as the showroom home of Elvis Presley. After the Hilton name was removed, the casino fell on hard times.

In July, receiver Ronald Johnson said the hotel-casino was falling short of a business plan that had already forecast for a tough year. Through June 30, revenues of $62.1 million were 9.2 percent below projections, and the operating loss of $6.3 million was more than double the projected loss of $2.6 million.

Colony Resorts LVH Acquisitions LLC, a subsidiary of Los Angeles-based private equity group Colony Capital, defaulted on the property's $252 million mortgage.

A receptionist answering the phones at Colony's offices Wednesday said the company "no longer has any interest" in LVH and would not comment on Wednesday's events.

Colony Resorts LVH Acquisitions will remain LVH's owner until the foreclosure sale is completed.