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Hooters Hotel restates worries over cash
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The owners of Hooters Hotel on Friday said they don't believe they have enough cash to meet financial obligations this year. » Buy this photo
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LAS VEGAS REVIEW-JOURNAL
Hooters Hotel owners reiterated on Friday they don't believe they have sufficient cash to meet all financial obligations this year as the property continues to miss interest payments while operating at a loss.
The owners did say in a federal filing, however, they have enough money to meet operational obligations, which traditionally include payroll and payments to vendors.
But Barbara Cappaert, a bond analyst with KDP Investment Advisors, disputed that, saying in a note to investors the hotel-casino may indeed have trouble sustaining any operations on what she projects to be $5 million in cash flow for the year.
"We reiterate our concern about Hooters Las Vegas as a going concern," Cappaert's note said. "We still believe that even on a land value basis, the bonds are only worth at most 20 cents on the dollar on a present value basis."
Hooters Hotel has missed three consecutive interest payments starting in April 2009 and its debt currently stands at $163 million, a filing Friday with the Securities and Exchange Commission shows.
The property continued to negotiate with its lenders on a forbearance agreement so banks would not foreclose or force a bankruptcy while owners work to find a remedy to its situation, the filing shows.
"The company has engaged a financial adviser to assist with its evaluation of financial and strategic alternatives," the filing said. "(These) may include a recapitalization, refinancing, restructuring or reorganization of its obligations or a sale of some or all of its business. The company and its advisers are actively working toward such a transaction."
Cappaert said no real progress has been made on any negotiations.
The 696-room hotel-casino on Tropicana Avenue posted a net loss of $3.9 million for the first quarter ended March 31, including a $500,524 operational loss. The losses are a slight improvement from the $4.1 million net loss and $727,000 operational loss for the same time prior year.
Revenues declined 15.4 percent to $11.3 million from $13.3 million in the quarter.
Casino revenues fell 24.1 percent to $4.2 million, hotel revenues dropped 7.8 percent to $3.7 million, and food and beverage dropped 15.8 percent to $4.5 million.
Contact reporter Arnold M. Knightly at aknightly @reviewjournal.com or 702-477-3893.
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@Eddie Gin-
Why would anyone want to concentrate on a shrinking market that complains about prices and expects to be treated like VIPs because of their zip code?
Newsflash, bubba- the Strip resorts that cater to the upper-middle to upper class out-of-town visitor are showing improvement while value-oriented "locals" operations are still seeing revenues drop.
Would the last person leaving Vegas please cut out the lights on the strip.
Who going to pay the $200,000 plus fireman salaries if Hooters goes bust.