LAS VEGAS, May 8 /PRNewswire-FirstCall/ -- Riviera Holdings
Corporation ("Riviera" or the "Company") (NYSE Amex: RIV) today
reported its financial results for the three-month period ended
March 31, 2009. First Quarter 2009 Results Net revenues for the
first quarter of 2009 were $34.7 million, a decrease of $13.3
million, or 28 percent, from $48.0 million for the comparable
period in the prior year. Net revenues decreased due to a 33
percent net revenue reduction at Riviera Las Vegas and an 11
percent net revenue reduction at Riviera Black Hawk. Income from
operations was $1.5 million, a decrease of $5.2 million, or 78.1
percent, from $6.7 million for the comparable period in the prior
year. The decrease was due primarily to an 87 percent decline in
operating results at Riviera Las Vegas and a 17 percent decline in
operating results at Riviera Black Hawk. The consolidated operating
results for the first quarter of 2009 included $1.0 million in
corporate payroll and related expenses and $0.2 million in equity
compensation expenses. These expenses were in line with the prior
year. Adjusted EBITDA(1) for the first quarter of 2009 was $5.6
million, a decrease of $4.7 million, or 46 percent, from $10.3
million for the comparable period in the prior year. Adjusted
EBITDA(1) consists of earnings before interest, income taxes,
depreciation, amortization, stock based compensation, changes in
the fair value of derivative instruments, mergers, acquisitions and
development costs, gains from the extinguishment of debt and
restructuring fees as more fully described within the footnote to
the financial summary in this release. Adjusted EBITDA(1) was 16
percent and 22 percent of net revenues for the three months ended
March 31, 2009 and 2008, respectively. The decrease in Adjusted
EBITDA(1) was due to a 55 percent reduction in Adjusted EBITDA(1)
at Riviera Las Vegas and a 17 percent reduction in Adjusted
EBITDA(1) at Riviera Black Hawk. Net loss for the first quarter of
2009 was $1.0 million, or ($0.08) per share on a fully diluted
basis, compared to a net loss of $5.8 million, or ($0.47) per share
on a fully diluted basis, for the same period in the prior year.
The $6.8 million year over year turnaround was primarily
attributable to a $10.0 million improvement in the amount recorded
as change in the fair value of derivatives partially offset by the
$5.2 million reduction in operating income. Change in the fair
value of derivatives was an unrealized gain of $1.7 million for the
three months ended March 31, 2009 compared to an unrealized loss of
$8.3 million for the prior year. As of March 31, 2009, the Company
had $16.3 million in cash and cash equivalents which includes
approximately $7 million in cash in the cages and on the casino
floors. Net cash and cash equivalents increased $2.8 million during
the first quarter as a result of $3.1 million in net cash provided
by operating activities partially offset by $0.3 million in net
cash used in investing activities due to maintenance capital
expenditures at both Riviera Las Vegas and Black Hawk. Cash and
cash equivalents would have decreased by approximately $1.2 million
had the Company paid quarterly interest of approximately $4 million
on the Credit Facility, which was due by March 31, 2009. Riviera
and its restricted subsidiaries entered into a $245 million Credit
Agreement (the "Credit Agreement" together with related security
agreements and other credit-related agreements, the "Credit
Facility") with Wachovia Bank, National Association (Wachovia), as
administrative agent on June 8, 2007. William L. Westerman,
Chairman and CEO of Riviera, said, "We regret that current economic
conditions forced us to make the decision to not pay our interest,
which was due at the end of March. However, the continuing
devastating competitive pressure on room rates, the rapidly
declining visitation to Las Vegas, especially by convention
attendees, verify we made the correct decision. It was necessary to
retain the funds which would have been employed to pay the first
quarter interest so as to maximize our liquidity. "Both our Las
Vegas and Black Hawk properties are generating positive free cash
flow and this, combined with our cash balances, will help insure
that we continue to pay all our operating costs on a timely basis
and fund maintenance capital expenditures. There will be no effect
on our team members, vendors and most importantly, our customers.
Our lenders and the Company are well aware of the necessity of
resolving this situation in an expeditious manner to preserve the
long term viability and value of the Company. Our immediate
priority is to address our untenable capital structure and with the
aid of our financial advisors develop a restructuring plan with the
goal of achieving a solution that either avoids the necessity for
Chapter 11 proceedings or that results in a pre-negotiated plan of
reorganization which would be confirmed through voluntary Chapter
11 proceedings." Mr. Westerman continued, "The deteriorating trends
in revenue and earnings experienced during 2008 continued as
evidenced by our first quarter results. We expect this situation to
continue as long as competitors in the Las Vegas market follow a
strategy of sacrificing ADR to maximize room occupancy and the
decline in convention business is unabated. In Black Hawk, payroll
and marketing expenses will increase as we prepare for the
implementation of Proposition 50 on July 2 (expanding games, limits
and hours). Furthermore, we are concerned that the temporary or
permanent suspension of construction by our next door neighbor in
Las Vegas, Fontainebleau will reduce opportunities to market to
"walk-in" traffic which we hoped would be a positive to our gaming
and food and beverage revenue. We are confident that we will
maintain sufficient cash flow to meet our operating obligations and
maintain our properties. We expect to emerge through a
restructuring with a capital structure which will enable the
Company not only to survive, but to grow as the economy recovers
and the competitive situation in Las Vegas returns to a more
rational environment." First Quarter Defaults The Company received
a notice of default on February 26, 2009 (the "February Notice"),
from Wachovia with respect to the Credit Facility in connection
with the Company's failure to provide a Deposit Account Control
Agreement, or DACA, from each of the Company's depository banks per
a request made by Wachovia to the Company on October 14, 2008. The
DACA that Wachovia requested the Company to execute was in a form
that the Company ultimately determined to contain unreasonable
terms and conditions as it would enable Wachovia to access all of
the Company's operating cash and order it to be transferred to a
bank account specified by Wachovia. The Notice further provided
that as a result of the default, the Company would no longer have
the option to request the LIBOR Rate loans described above.
Consequently, the Term Loan was converted to an ABR Loan effective
March 31, 2009. On March 25, 2009, the Company engaged XRoads
Solution Group LLC as our financial advisor. Based on an extensive
analysis of our current and projected liquidity, and with our
financial advisor's input, we determined it was in the best
interests of the Company to not pay the accrued interest of
approximately $4 million on our $245 million Credit Facility, which
was due March 30, 2009. Consequently, we elected to not make the
payment. The Company's failure to pay interest due on any loan
within our Credit Facility within a three-day grace period from the
due date was an event of default under our Credit Facility. As a
result of this event of default, the Company's lenders have the
right to seek to charge additional default interest on the
Company's outstanding principal and interest under the Credit
Agreement, and automatically charge additional default interest on
any overdue amounts under the Swap Agreement. These defaults rates
are in addition to the interest rates that would otherwise be
applicable under the Credit Agreement and Swap Agreement. The
Company received an additional notice of default on April 1, 2009
(the "Additional Default Notice") from Wachovia. The Additional
Default Notice alleges that subsequent to the Company's receipt of
the February Notice, additional defaults and events of default had
occurred and were continuing under the terms of the Credit
Agreement including, but not limited to: (i) the Company's failure
to deliver to Wachovia audited financial statement without a "going
concern" qualification; (ii) the Company's failure to deliver
Wachovia a certificate of an independent certified public
accountant in conjunction with the Company's financial statement;
and (iii) the occurrence of a default or breach under a secured
hedging agreement. The Additional Default Notice also states that
in addition to the foregoing events of default that there were
additional potential events of default as a result of, among other
things, the Company's failure to pay: (i) accrued interest on the
Company's LIBOR rate loan on March 30, 2009 (the "LIBOR Payment"),
(ii) the commitment fee on March 31, 2009 (the "Commitment Fee
Payment"), and (iii) accrued interest on the Company's ABR Loans on
March 31, 2009 (the "ABR Payment" and together with the LIBOR
Payment and Commitment Fee Payment, the "March 31st Payments"). The
Company has not paid the March 31st Payments and the applicable
grace period to make these payments has expired. The Additional
Default Notice states that as a result of these events of defaults,
(a) all amounts owing under the Credit Agreement thereafter would
bear interest, payable on demand, at a rate equal to: (i) in the
case of principal, 2% above the otherwise applicable rate; and (ii)
in the case of interest, fees and other amounts, the ABR Default
Rate (as defined in the Credit Agreement), which as of April 1,
2009 was 6.25%; and (b) neither Swingline Loans nor additional
Revolving Loans are available to the Company at this time. As a
result of the February Notice and the Additional Default Notice,
effective March 31, 2009, the Term Loan interest rate is now
approximately 10.5% per annum and effective April 1, 2009, the
Revolver interest rate is approximately 6.25% per annum. On April
1, 2009, we also received Notice of Event of Default and
Reservation of Rights (the "Swap Default Notice") in connection
with an alleged event of default under our Swap Agreement. The Swap
Default Notice alleges that (a) an event of default exists due to
the occurrence of an event of default(s) under the Credit Agreement
and (b) that the Company failed to make payments totaling $2.1
million to Wachovia with respect to one or more transactions under
the Swap Agreement. The Company has not paid this overdue amount
and the applicable grace period to make this payment has expired.
As previously announced by the Company, any default under the Swap
Agreement automatically results in an additional default interest
of 1% on any overdue amounts under the Swap Agreement. This default
rate is in addition to the interest rate that would otherwise be
applicable under the Swap Agreement. As of March 31, 2009, the mark
to market amount outstanding under the Swap Agreement was $28.0
million, excluding any credit risk adjustment. With the aid of our
financial advisors and outside counsel, we are continuing to
negotiate with our various creditor constituencies to refinance or
restructure our debt. We cannot assure you that we will be
successful in completing a refinancing or consensual out-of-court
restructuring, if necessary. If we are unable to do so, we would
likely be compelled to seek protection under Chapter 11 of the U.
S. Bankruptcy Code. Forward -Looking Statements In accordance with
the "Safe Harbor" provisions (as that term is defined in Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended) of the Private
Securities Litigation Reform Act of 1995, we provide the following
cautionary remarks regarding important factors which, among others,
could cause future results to differ materially from the
forward-looking statements, expectations and assumptions expressed
or implied in this news release. Forward-looking statements include
the words "may," "aim," "foresee," "potential," "should," "would,"
"could," "likely," "estimate," "intend," "plan," "continue,"
"believe," "expect," "projections" or "anticipate," and similar
words, and they include all discussions about our ongoing or future
plans, objectives or expectations. Risks and uncertainties that
could cause actual results to differ materially from the results
anticipated in the forward-looking statements include, among other
factors: uncertain hotel and casino market conditions, financing
requirements, interest rates, proposals for the acquisition of
Riviera, increases in energy costs, economic and political
instability, disruptions affecting expansion and modernization
objectives and timetables, onerous regulatory requirements,
fiscally burdensome planned or unplanned Capital Expenditures and
other risks and uncertainties detailed from time to time in our
filings with the Securities and Exchange Commission.
Forward-looking statements involve significant known and unknown
risks, uncertainties and other factors that may cause our actual
results, performance or achievements to differ materially from
anticipated results, performance or achievements expressed or
implied by the forward-looking statements. We do not intend to
update its forward-looking statements even though our situation or
plans may change in the future, unless applicable law requires us
to do so. About Riviera Holdings Corporation Riviera Holdings
Corporation owns and operates the Riviera Hotel and Casino on the
Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk,
Colorado. Riviera Holding Corporation's stock is listed on the NYSE
Amex, under the symbol RIV. - Tables Follow - Riviera Holdings
Corporation Financial Summary (Amounts in thousands except per
share amounts) Three Months Ended March 31,
-------------------------------------------- 2009 2008 Var %Var
---- ---- ---- ---- Net Revenues: Riviera Las Vegas $24,462 $36,450
$(11,988) -32.9% Riviera Black Hawk 10,194 11,512 (1,317) -11.4%
------ ------ ------- Total Net Revenues 34,656 47,962 (13,305)
-27.7% Income From Operations: Riviera Las Vegas 743 5,539 (4,796)
-86.6% Riviera Black Hawk 1,912 2,312 (400) -17.3% Mergers,
acquisitions and development costs 0 (23) 23 100.0% Share-based
compensation (185) (183) (2) 1.1% Corporate expenses (1,000) (945)
(55) -5.8% ------- ----- ---- Total Income From Operations: 1,470
6,700 (5,230) -78.1% Adjusted EBITDA (1): Riviera Las Vegas 3,318
7,371 (4,053) -55.0% Riviera Black Hawk 3,236 3,903 (667) -17.1%
Corporate Expenses (1,000) (945) (55) -5.8% ------- ----- ----
Total Adjusted EBITDA 5,554 10,329 (4,775) -46.2% Adjusted EBITDA
Margins (2): Riviera Las Vegas 13.6% 20.2% -6.7% Riviera Black Hawk
31.7% 33.9% -2.2% Consolidated 16.0% 21.5% -5.5% ----- ----- -----
Net loss $(1,037) $(5,783) $4,746 EARNINGS PER SHARE DATA: Weighted
average basic shares outstanding 12,492 12,341 151 Basic earnings
(loss) per share $(0.08) $(0.47) $0.39 Weighted average diluted
shares outstanding 12,492 12,341 151 Diluted earnings (loss) per
share $(0.08) $(0.47) $0.39 (1) Adjusted EBITDA consists of
earnings before interest, income taxes, depreciation, amortization,
share-based compensation, changes in the fair value of derivative
instruments, gains on extinguishment of debt, restructuring fees
and mergers, acquisitions and development costs as shown in the
reconciliation with net loss in the tables below in this release.
Adjusted EBITDA is presented solely as a supplemental disclosure
because we believe that it is 1) a widely used measure of operating
performance in the gaming industry, and 2) a principal basis for
valuation of gaming companies by certain investors. We use
property-level EBITDA (earnings before interest, income taxes,
depreciation, amortization and corporate expense) as the primary
measure of our business segment properties' performance, including
the evaluation of our operating personnel. Adjusted EBITDA should
not be construed as an alternative to operating income, as an
indicator of our operating performance, as an alternative to cash
flows from operating activities, as a measure of liquidity, or as
any other measure determined in accordance with generally accepted
accounting principles. We have significant uses of cash flows,
including capital expenditures, interest payments and debt
principal repayments, which are not reflected in Adjusted EBITDA.
Also, other gaming companies that report EBITDA or Adjusted EBITDA
may calculate it in a different manner than we do. A reconciliation
of net income (loss) to Adjusted EBITDA is included in the tables
below in this release. (2) Adjusted EBITDA Margins represent
Adjusted EBITDA divided by Net Revenues. Riviera Holdings
Corporation and Subsidiaries Reconciliation of Net loss to Adjusted
EBITDA (Amounts in thousands) Net Interest (Gain) or (Gain) on
Income Expense/ Loss on Est. of Depr. (Loss) (Income) Derivatives
Debt Exp ------ -------- ----------- ---- --- First Quarter 2009:
Riviera Las Vegas $750 $(7) $- $- $2,871 Riviera Black Hawk 747
1,311 - (146) 1,028 Corporate (2,534) 2,930 (1,672) - - -------
----- ------- --- --- $(1,037) $4,234 $(1,672) $(146) $3,899 First
Quarter 2008: Riviera Las Vegas $5,556 $(17) $- $- $2,352 Riviera
Black Hawk 1,005 1,307 - - 1,071 Corporate (12,344) 2,886 8,307 - -
-------- ----- ----- --- --- $(5,783) $4,176 $8,307 $- $3,423
Mergers Stock Acquisitions, Restr. Based & Dev. Mgmt. Adjusted
Fees Comp Costs Fee EBITDA ---- ---- ----- --- ------ First Quarter
2009: Riviera Las Vegas $- $- $- $(296) $3,318 Riviera Black Hawk -
- - 296 3,236 Corporate 91 185 - - (1,000) --- --- --- --- -------
$91 $185 $- $- $5,554 First Quarter 2008: Riviera Las Vegas $- $-
$- $(520) $7,371 Riviera Black Hawk - - - 520 3,903 Corporate - 183
23 - (945) --- --- --- --- ----- $- $183 $23 $- $10,329 Balance
Sheet Summary March 31, December 31, 2009 2008 ---- ---- Cash and
short term investments $19,072 $16,233 Total current assets 25,750
22,384 Property and equipment, net 176,284 179,918 Total assets
$204,618 $204,960 Long-term debt, net of current portion 151 158
Total current liabilities $264,112 $263,595 Total stockholders'
deficiency $(59,645) $(58,793) RIVIERA HOLDINGS CORPORATION AND
SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts
in thousands, except per share Three Months amounts) Ended March 31
2009 2008 ---- ---- Revenues: Casino $20,231 $23,966 Rooms 10,336
15,870 Food and beverage 5,564 8,045 Entertainment 2,043 3,377
Other 1,600 1,876 ----- ----- Total Revenues 39,774 53,134 ------
------ Less-promotional allowances (5,118) (5,172) ------- -------
Net revenues $34,656 $47,962 ------- ------- COSTS AND EXPENSES:
Direct costs and expenses of operating departments: Casino 10,635
12,421 Rooms 4,888 6,864 Food and beverage 3,640 5,826
Entertainment 933 2,283 Other 296 328 Other operating expenses:
General and administrative 8,710 9,911 Mergers, acquisitions and
development costs - 23 Share-based compensation 185 183
Depreciation and amortization 3,899 3,423 ----- ----- Total costs
and expenses 33,186 41,262 ------ ------ INCOME FROM OPERATIONS
1,470 6,700 ----- ----- OTHER EXPENSE: Interest expense, net
(4,234) (4,176) Gain on extinguishment of debt 146 - Restructuring
fees (91) - Change in fair value of derivatives 1,672 (8,307) -----
------- Total other expense (2,507) (12,483) ------- -------- NET
LOSS $(1,037) $(5,783) ======== ======== LOSS PER SHARE DATA:
Shares used in calculating net income (loss) per common share:
Basic 12,492 12,341 Diluted 12,492 12,341 Net loss per common
share: Basic $(0.08) $(0.47) Diluted $(0.08) $(0.47) DATASOURCE:
Riviera Holdings Corporation CONTACT: AT THE COMPANY, Phil Simons,
Treasurer and CFO of Riviera Holdings Corporation, Voice,
+1-702-794-9527, Fax, +1-702-794-9442, ; or INVESTOR RELATIONS,
Betsy Truax of Skorpus Consulting, Voice, +1-208-241-3704, Fax,
+1-208-232-5317, , for Riviera Holdings Corporation Web Site:
http://www.theriviera.com/
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