Landry’s seeks new financing after end to options review

Jul 31, 2007 7:59 AM

Landry’s Restaurants Inc. (LNY) shares have been pummeled by investors in recent weeks, primarily due to its inability to file its financial returns with the Securities & Exchange Commission in a timely manner.

The delays brought a notice from a bondholder that Landry’s must immediately pay off a $400 million note, plus interest, since it violated covenants attached to the loan, forcing the company to seek refinancing.

The action brought a share downgrade notice from analysts at Oppenheimer who urged investors to remain cautious until the casual dining operator, which also owns the Golden Nugget Hotel/Casinos in Las Vegas and Laughlin, Nev., resolves a financing issue with its creditors.

On Monday, Landry’s Restaurants took the first step toward resolving their problems by announcing that the company’s independent review of its historical stock option granting practices had been completed and that it expects to shortly become current regarding any outstanding SEC reports.

The committee determined that there were deficiencies in the stock option grants but that there was no misconduct on the part of anyone involved in the stock option dating.

However, the company said that as a result of these options, it will take an $8.6 million charge.

As for the financing issue, Rick Liem, chief financial officer, said he felt the company would be able to refinance the amount outstanding under the notes held by U.S. Bank.

"Due to the recent downturn in the credit markets and the increase in interest rate spreads," he explained, "our 7.50% below market notes did not provide enough of an economic return to our bondholders and prompted their decision to accelerate the notes.

"The recent $545 million credit facility secured for the Golden Nugget properties is not impacted, nor are our other unrestricted subsidiaries."

In active trading on Monday, Landry’s Restaurants shares moved up $1.34 to $26.77 per share.

Another Venetian

Las Vegas Sands Corp. (LVS) has big plans for the $2.5 billion hotel/casino it will open at the end of August in Macau.

In a recent interview, William Weidner, company president, said he expects the 3,000-room Venetian Macao to reach an occupancy rate of between 85% and 95% by October.

"We expect the hotel to be wall-to-wall by October," he said, adding that the hotel isn’t targeting just gamblers but other vacationers and business visitors as well, thus lengthening the duration of each stay.

Since gaming was introduced to the Chinese enclave three years ago, the area has been known primarily as a stop for day-trippers.

But at the Venetian Macao, Weidner said, visitors are expected to stay for three to four days.

Macau delay

Melco PBL Entertainment Ltd. (MPEL) has advised that it has negotiated an extension to the time it will need to purchase its Macau Peninsula site.

The extension, the company said, provides additional flexibility in the timing for the closing of the transaction and preserves the company’s ability to complete the transaction through July of 2008.

Cause of the delay, the company said, was its concern with restrictions recently imposed by the neighboring Guandong Province regarding tourists to Macau and the amount of time these tourists can stay in the Chinese enclave which has become Asia’s largest gaming center.

Although the company remains committed to the Macau project, it said the extension will give it more time to review its development plans.

Big payday

As deals go, Steve Bollenbach, whose executive career has been highlighted by some of the biggest sales and purchases in the hotel/gaming industry, will experience his biggest payday when Hilton Hotels Inc. (HLT) is acquired by the Blackstone Group.

He looks to cash out for $135 million.

The amount was identified in a recent proxy statement filed with the Securities and Exchange Commission, according to Reuters.

Listed as part of the windfall were: $74.5 million in options payments; $34.7 million from vested stock; $13.3 million from performance share units; $2.2 million in restricted stock units and $10.34 million in severance payments.

More earnings

Quarterly earnings announcements have been scheduled by the following companies:

MGM Mirage Inc. (MGM) on Thursday, Aug. 2, at 8 a.m. PDT.

Scientific Games Corporation (SGMS) on Friday, Aug. 3, at 5:30 a.m. PDT.

Pinnacle Entertainment Inc. (PNK) on Tuesday, Aug. 7, at 8 a.m. PDT.

WMS Industries Inc. (WMS) on Tuesday, Aug. 7, at l:30 p.m. PDT. (UBET) on Tuesday, Aug. 7, at 2 p.m. PDT.

Station Casinos Inc. (STN) on Wednesday, Aug. 8, at 4 a.m. PDT.

Churchill Downs Inc. (CHDN) on Wednesday, Aug. 8 at 6 a.m. PDT.

Progressive Gaming International Corporation (PGIC) on Aug. 8 at 8 a.m. PDT.

Multimedia Games Inc. (MGAM) on Thursday, Aug. 9, at 6 a.m. PDT.