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Feb. 10, 2009
Copyright © Las Vegas Review-Journal

Analyst says default likely for Hooters

By ARNOLD M. KNIGHTLY
LAS VEGAS REVIEW-JOURNAL

Hooters Hotel could default on its $130 million bond in the next few months if the current operating environment doesn't improve quickly, according to a bond analyst's Monday note to investors.

The note was issued after the off-Strip property estimated that it would post an operating loss of $1.5 million in the fourth quarter. Hooters made the estimate in a preliminary revenue report released Monday morning to the Securities and Exchange Commission.

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    • Barbara Cappaert, a bond analyst with KDP Investment Advisors, said "given the fourth-quarter operating performance and the expectation that the first quarter will be equally as bad, the company is unlikely to make its April coupon," referring to a $3 million bond payment due April 1.

    Michael Hessling, property president and minority owner, declined to comment on Monday.

    Cappaert is not the only analyst expressing concern about Hooters' economic vitality.

    Moody's Investment Services downgraded the property's debt in December to Ca, or extremely speculative, from Caa3, or in poor standing, because "it appears unlikely that the company will generate sufficient cash flow to avoid a default."

    Moody's bond analyst Kendra Smith expressed concern then that the property would not be able to make $11.4 million in debt payments due this year.

    Hooters' revenues dropped 11.9 percent to $13.3 million from $15.1 million for the quarter ended Dec. 31, the filing with the Securities and Exchange Commission shows.

    Fourth-quarter cash flow, defined as earnings before interest, taxes, depreciation and amortization, was $600,000, down from $1.8 million reported a year earlier.

    Hotel revenues dropped 22.7 percent and casino revenues slipped 4.3 percent, but food and beverage revenues remained flat.

    Hooters joins Station Casinos, Harrah's Entertainment, Herbst Gaming and Black Gaming as privately held casino companies caught with high debt loads after the economic downturn.

    Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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    Julia wrote on February 20, 2009 12:55 AM: I hope they don't close... I lost my job in January. There is already enough competition out there for employment... I can’t compete against hot women with huge breasts!


    paul blart mall cop wrote on February 17, 2009 08:30 PM: Who gives a HOOT?


    smith wrote on February 10, 2009 09:17 PM: I love Hooters too. Their Philly Steak & Cheese sandwich and Bobby Slayton (the politically-incorrect comedian) are wonderful. Don't expect the casual atmosphere and attractive Hooter girls to satisfy everyone's expectations of what a casino should be.


    B00blicious! wrote on February 10, 2009 06:51 PM: Personally, I hope they lose their shirts.

    ba-da-pish


    Patrick wrote on February 10, 2009 05:41 PM: I always liked the San Remo, and stayed there so much that I recognized the faces of the long time employees. Have not returned since it changed to Hooters. I liked San Remo for location, short walk from car in parking garage to casino/hotel lobby, intimate buffet, and for slots that one could play. My friends and I stayed often talk about the fun times we had at the San Remo, and how we miss it. If the hotel had become some other franchise we would have returned, but Hooters projects an image, not a place I would take my female companions.


    Craig Taylor wrote on February 10, 2009 01:32 PM: This is not surprising.Since Vegas is in a depression, who would expect anyone to frequent a disgusting, run down, low-life joint like Hooters ?
    Not exactly the draw for high rollers I would surmise.
    The amazing part is that this "toilet" lasted this long ! The very idea that breasts alone would bring good fortune to an idiotic bunch of investors with no class or brains is not exactly a revelation.
    What is stupifyingly dumb are the investors, banks, lenders who forked over money to these morons.
    Following a close second to this stupid concept of breasts=profits, is the idiotic idea of Mayor Goodman's to build a mob museum ! Simply becasue Goodman was the mob lawyer de jour, does not validate his throwing out money for the glorification of criminal scum. In case Oscar hasn't noticed, our teachers are being laid off. This in a state where there is a pathetic 58% graduation rate. !


    AGG wrote on February 10, 2009 01:01 PM: Hope they can turn it around as well.

    I love Hooters!


    billybob wrote on February 10, 2009 11:14 AM: What a hoot!


    TC wrote on February 10, 2009 08:51 AM: RIGHT ON THE MONEY BOB- THE VEGAS HOOTER GIRLS DEFINITELY NEED A VEGAS WARDROBE. I "REARALLY" ENJOY IT THERE. HOPEFULLY HOOTERS READS THIS BLOG- NOT TO MENTION THE GIRLS TIPS COULD INCREASE TOO!!


    diceboy wrote on February 10, 2009 03:37 AM: Hooters has a small hotel with a small casino and an even smaller sports book. The location is only 1/4 mile or so off the Strip but other casinos before it, the last being the San Remo, have not done that well in this location either. When I was out in Las Vegas on business last year I gambled there for a while and had a lot of fun so hopefully Hooters can turn it around.


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