VEGAS INC Coverage
The Nevada Gaming Commission today allowed lenders and investors of the Las Vegas Hilton to pursue the appointment of a receiver to operate the property’s casino while a legal dispute plays out in court.
The commission voted 3-1 to allow Ronald Johnson to operate the casino under an existing gaming license held by Colony Capital LLC, which has been foreclosed upon by lenders Goldman Sachs and Gramercy Capital Corp.
The action places the operation of the 2,950-room off-Strip hotel back into the hands of Clark County District Court Judge Elizabeth Gonzales, who was asked earlier in the week to appoint Johnson as receiver. Gonzales authorized Johnson to oversee non-gaming operations, but deferred to the commission to determine if he could be allowed to run the casino side.
Colony Capital objected to the lenders’ efforts to have Johnson appointed because company executives said they could be held liable for his actions despite having no authority over him. Colony officials threatened to surrender their licenses if Johnson were allowed to operate under them.
Commissioners, meanwhile, did not want to influence the decision to appoint a receiver. But they also were concerned that without one, the Hilton would have to shut down casino operations, threatening the viability of the property and risking its closure.
“Today, it’s a two-alarm fire,” said Bud Hicks, a lawyer representing the lenders. “In 28 days, it’ll be a five-alarm fire.”
Hicks said the appointment of a receiver “allows us to move down the path of a long-term solution for the property.”
In August, Colony defaulted on its $252 million term loan and majority owner Thomas Barrack said Goldman Sachs and Gramercy Capital refused to negotiate a recapitalization of the company restructuring of the debt.
In addition, the iconic Hilton signs will be coming down early next month when the company changes its name to LVH — Las Vegas Hotel & Casino.
Commissioners voted 3-1 to find Johnson suitable to operate the casino if he is appointed receiver, adding a condition that the matter be brought back to regulators in a year if a new buyer is not identified.
In other business, the commission approved licensing the new owners of the Hard Rock Hotel who promised to run their controversial nightclub and pool with integrity.
Executives of a division of New York-based Brookfield Asset Management Inc. were licensed by the board and Warner Gaming Inc. will continue to oversee day-to-day operations at the property.
William Warner of Warner Gaming said the companies have created a foundation for the future of the property and throughout 2012, he’ll roll out a new master plan for the Hard Rock. The plan will include a new marketing campaign focusing on the resort experience and capitalizing on entertainment at The Joint, the property’s primary music venue.
The company also has hired Paul Pusateri, who was licensed today, as its new chief operating officer.
“We’re going to relaunch our website in March and we’re going to program The Joint more aggressively,” Warner said. “We felt that a lot of programming was missing.”
Warner also referenced trouble the property experienced last year at its nightclub venues.
“Our nightclubs and pool will be run with integrity as well as continue to be an important part of our revenue,” he said.
Earlier this year, the Hard Rock settled a complained lodged by the Gaming Control Board in late 2010, paying a $650,000 fine when employees and supervisors broke the law by selling drugs and providing private restrooms for patrons to take drugs and have sex.