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Gaming Guru

Arnold M. Knightly
 

Stratosphere step closer to changing ownership

10 January 2008

LAS VEGAS, Nevada -- The $1.3 billion sale of the Stratosphere's parent company to an affiliate of Goldman Sachs was recommended for approval by the state Gaming Control Board on Wednesday.

Whitehall Street Real Estate Funds is buying American Casino & Entertainment Properties, a gaming subsidiary controlled by billionaire corporate raider Carl Icahn. American Casino is also the parent company of both Arizona Charlie's casinos and the Aquarius in Laughlin.

Whitehall managing director Stuart Rothenberg told regulators most of the gaming company's executives and property management will remain in place after the sale's closure, which is scheduled for next month.

American Casino Chief Executive Officer and President Richard Brown, who ran the company for eight years under Icahn, will continue to run the company's day-to-day operations.

"The first part of the transaction will be focused on tightening up our operations," Brown said after the hearing. "It's about operating more efficiently and driving more revenue."

Brown said that while Icahn was brilliant in the way he was able to maximize his returns with well-placed capital investments, he wasn't willing to commit to a large redevelopment of the Stratosphere.

Neilander said he was looking forward to seeing what direction the new owners will take the company.

"Icahn has gotten everything he can out of it," Neilander said during the hearing. "It's a good thing to have new tutelage and retooling."

The purchase is being backed by a $4.8 billion Whitehall fund, Rothenberg said.

Regulators were told $54 million from the financing will be used for capital-expenditure projects immediately: $25 million for renovations at the Stratosphere, $10 million at Arizona Charlie's Decatur for a new bingo room, and $19 million for room renovations at the Aquarius.

The buyout is Whitehall's second foray into local gaming, with the investment branch holding a 40 percent share in the Las Vegas Hilton through WH/LVH Managers Vetco.