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Gaming Guru

Arnold M. Knightly
 

Riviera Holdings posts quarterly loss

5 November 2007

LAS VEGAS, Nevada -- Riviera Holdings Corp. on Friday reported an $18.2 million operating loss because of one-time charges and despite improved revenues and cash flow in the third quarter.

Riviera Holdings, the parent company of the Riviera on the Strip, said the $18.2 million loss was driven by charges associated with the swapping of 11 percent notes in favor of notes fixed at 7.5 percent on $225 million in debt.

The loss for the quarter ended Sept. 30 equaled a per share loss of $1.48, which is an increase from last year's loss of $432,000, or 4 cents a share.

Analysts polled by Reuters estimated earnings of 12 cents per share.

"Please keep in mind that our current operation results continue to post increases," said Chairman and Chief Executive Officer William Westerman, during the earnings call.

Third-quarter revenues rose 4.2 percent to $52.4 million from $50.3 million. Nine-month revenues rose 2.3 percent to $158 million from $154.5 million in 2006.

Cash flow, defined as earnings before interest, taxes, depreciation and amortization, rose 9 percent to $10.3 million for the quarter.

Riviera Holdings' cash flow for the first nine months of 2007 increased 13 percent to $ 36.1 million from $31.9 million last year.

Third-quarter cash flow at the company's flagship Riviera property was $6.1 million, a 7.3 percent increase compared with $5.7 million a year ago. Cash flow for 2007 increased 7.2 percent to $ 24.1 million from $22.5 million last year.

Cash flow was driven by a 6.5 percent increase in average daily room rates to $79.13 for the third quarter.

The improved numbers at the Strip property follow recent closings of several other midlevel properties on the Strip including the Stardust in November 2006 and the New Frontier in July.

Riviera obtained the New Frontier's customer list and began a marketing campaign to lure those former players to the property. The company also hired some of the Frontier's marketing management.

During the earnings call, the company's officers declined to discuss a $34 per share buyout offer that has been pending since May.

On May 16, investment group Riv Acquisition Holdings made a $423.6 million offer, $34 per share. It was the third offer by the group composed of major shareholders.

Westerman said turmoil in the credit and capital markets is having an effect on all mergers and acquisitions globally.

"Obviously it is having an affect on our process," he said.

A Riv Acquisition spokesman also declined to discuss the offer's status Friday.

Riviera Holdings shares rose 39 cents, or 1.45 percent, Friday to close at $27.29 on the American Stock Exchange.