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LAS VEGAS-Riviera Holdings Corp. this week reported another miserable quarter for its nameplate resort here and said it continues to work on restructuring $281 million debt such that it can avoid filing for protection from creditors under Ch. 11 of the US Bankruptcy Code. The locally based company has been in default of its credit agreement for most of the year.

Riviera Holdings own the Riviera hotel-casino in Las Vegas and the Riviera hotel-casino in Black Hawk, Co. Thanks to continued poor performance in Las Vegas, the company produced a net loss of $4.7 million in the third quarter, up from a loss of $3.5 million in the same year-earlier period, despite $1.3 million of net operating income from its Colorado property, an 8.3% increase from the year-earlier period attributable to increased casino revenue.

In Las Vegas, the company produced a loss from operations of $700,000, which is a 404% turnaround from $200,000 of income from operations in the same year-earlier period. The decrease was primarily attributed to a 25% drop in net revenue to $22.6 million from $30.2 million on an across-the-board drop in revenues. Operating margin for the property was negative at 3.1%; in the same year-earlier period the margin was a positive 0.8%.

Casino revenues fell 16.9% to $9.8 million from $11.8 million in the same year-earlier period, with slots revenue off by 13.7% and table games revenue off by 27.3%. Room revenue fell by 28.6% to $8.7 million from $12.1 million, primarily due to a 20.8% reduction in the average daily room rate to $59.51 from $75.17. Average occupancy [per available room] fell more than 1,000 basis points to 76.7% from 87.1% in the same year-earlier period. As a result, revenue per available room, or RevPar, fell 30.3% to $45.61 from $65.44 in the same year-earlier period.

Food and beverage revenues decreased 24.9% to $4.2 million from $5.6 million in the same year-earlier period, with both food and beverage revenue off by approximately the same amount. The company has been closing certain food and beverage outlets in conjunction with low occupancy. Entertainment revenue declined 28% to $2.6 million from $3.5 million in the same year-earlier period. The company attributed the decrease primarily to the closure of select entertainment acts and an overall reduction in ticket sales at all entertainment venues. Other revenue fell 19.5% to $1.2 million from $1.5 million due primarily to lower tenant rental income as a result of vacancies and rent concessions.

“We believe that due to a number of factors affecting consumers, including but not limited to a slowdown in global economies, contracting credit markets and reduced consumer spending, the outlook for the gaming and hospitality industries remains highly uncertain. Based on these adverse circumstances, we believe that the company will continue to experience lower than expected hotel occupancy rates and casino volumes,” Riviera Holdings said in its quarterly financial report. “As a result of the economic factors and the defaults on the credit facility, there is substantial doubt about our ability to continue as a going concern.”

Through the first nine months of the year, income from its Vegas operations fell 91.1% to $900,000 from $10 million in the same year-earlier period, on a 28.9% decrease in net revenues from the resort to $72 million from $101.2 million. The decrease is principally due the net revenue decline being insufficiently offset by reductions in costs and expenses.

The company has been in default of its $245-million credit agreement since February. In March, the company said it will have to file for Ch, 11 bankruptcy protection from creditors if it is unsuccessful in renegotiating the loan terms with its creditors. As a result of the defaults, the interest rates on its debt have gone up. The term loan interest rate is now 10.5% and the revolver interest rate is now 6.25%. The company is also is in default with regard to a credit swap agreement with Wachovia.

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