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Best of Howard Stutz

Gaming Guru

Howard Stutz

Harrah's tells Privé Nightclub to pay rent or leave

9 March 2010

LAS VEGAS, Nevada -- Harrah's Entertainment has told the owners of the bankrupt Privé Nightclub and its adjacent Living Room ultralounge inside Planet Hollywood Resort to either pay past-due rent and expenses or leave the company's recently acquired Strip hotel-casino.

Harrah's took over the Planet Hollywood Resort in February and immediately set out to deal with the Miami-based nightclub operator, Opium Group, which ran afoul of state gaming regulators and Clark County authorities last year over the operation of the nightclubs.

Opium Group filed Chapter 11 bankruptcy protection in Miami last November for the nightclubs.

Last week, Harrah's attorneys said in a motion filed with the court that the Privé operators are past due on rent since the beginning of the year and are delinquent on paying their share of a $500,000 fine assessed by the Nevada Gaming Commission last year on Planet Hollywood's previous owner.

Planet Hollywood Resort's former owners settled a multicount complaint with gaming regulators for not properly policing actions by Privé's operators. The complaint included allowing underage and excessive drinking at the clubs and dumping inebriated patrons in the Planet Hollywood casino.

The Privé owners agreed to pay $375,000 of Planet Hollywood's fine through an initial payment of $125,000 and five monthly payments of $50,000. According to the court filing, only one $50,000 payment has been made.

Harrah's is asking the court to allow it to evict Privé, but the nightclub operators are asking for an extension to decide whether they want to retain their lease at the casino.

Harrah's took over Planet Hollywood Resort after the previous ownership defaulted on its loans. Gaming regulators let Harrah's pay $70 million to acquire $306 million of the resort's debt, which was converted into equity.

Harrah's also took on the property's remaining $554 million mortgage.

The deal gave Harrah's property near its other Strip hotel-casinos for much less than it would cost to build, company Chairman and Chief Executive Officer Gary Loveman said in December.

Harrah's wants the Planet Hollywood brand to appeal to younger visitors.

Harrah's tells Privé Nightclub to pay rent or leave is republished from