Tuesday, March 31, 1998 | 9:34 a.m.
Mirage Resorts Inc. has purchased the Country Star Restaurant on the Las Vegas Strip, removing any doubt about Mirage's ability to develop a series of nearby parcels it purchased in December.
Mirage also said its related $135 million acquisition of Boardwalk Casino Inc. is on track for a May 1 completion. Boardwalk will continue to operate as is, for the short term at least.
"Nothing at all will change for the foreseeable future with Boardwalk," said Mirage spokesman Alan Feldman.
Mirage purchased the Country Star from a local company majority-owned by Country Star Restaurants Inc. of Los Angeles for $1.55 million in cash. Minority owners of the subsidiary, Country Star Las Vegas LLC, included Cirrus Cirrus Inc., a small Las Vegas investment company; and NevStar LLC, a real estate investment company bought by Mirage at the same time it bought Boardwalk.
Immediately prior to Mirage's acquisition of Country Star, Country Star bought out Cirrus Cirrus' interest in Country Star Las Vegas LLC for $200,000 in cash and 2.25 million shares of Country Star common stock.
Despite the acquisition, it appears that Country Star Restaurants Inc. will continue to operate the restaurant under a lease agreement with Mirage. But in separate recent interviews, the companies were at some odds as to whether the lease has been signed.
According to Country Star filings with the Securities and Exchange Commission, and Country Star spokesman Robert L. Davidson, the lease is in place.
"The lease really has taken effect," Davidson said.
But Mirage's Feldman said rent terms are still being negotiated.
"If we can work out this lease agreement, then they'll lease it from us," Feldman said.
Davidson characterized the lease negotiations as "the fine points."
"It won't have major changes (from details listed in Country Star SEC filings)," Davidson said.
According to Country Star SEC filings, the companies have agreed to reduce Country Star's monthly rent from $65,000 to "one-half of the company's positive cash flow from operating the restaurant."
Prior to the acquisition, Country Star rented the land the restaurant is on from NevStar. In December, Mirage acquired the NevStar parcel, and two other parcels from other owners, for $39 million.
Mirage's December acquisitions brought the company 12 acres of land along the Strip, including 817 feet of continuous Strip-front property.
At the time of that December acquisition, it was unclear what would become of Country Star. The restaurant had not paid rent since September and was $195,000 in arrears to NevStar.
When NevStar threatened to terminate the Country Star lease, Country Star Las Vegas LLC declared bankruptcy.
"Such a bankruptcy proceeding had to be commenced before the legal termination of the lease in order for the lease ... to remain an asset of [Country Star]," states a Country Star SEC filing.
According to the same filing, Country Star's new lease with Mirage was contingent on the dismissal of Country Star Las Vegas LLC's bankruptcy proceeding. Davidson said the company left bankruptcy protection Feb. 8.
Mirage now owns the Country Star building and all its fixtures. But the acquisition also brings the company something that's less tangible, but probably more important.
"They purchased the right to do what they want to do with the property when they want to do it," Davidson said.
Country Stars' former lease, with NevStar, was for 18 years, a fact that cast some doubt on Mirage's ability to re-develop the property any time soon. The new lease will expire Sept. 30, and then continue month-to-month.
According to Feldman, Mirage has no immediate plans for the Country Star site, but will build something there eventually.
"If what you're asking is is the County Star going to be there forever, the answer is no," Feldman said.
But right now, Mirage is fully occupied completing its new Bellagio resort and casino, he said.
"That's years away and not at all on our radar right now," Feldman said of plans for Country Star.
Ditto for the Boardwalk Casino, he said. Boardwalk will continue as is, with its Holiday Inn affiliation, for the foreseeable future, Feldman said.
Once Bellagio is up and stable -- a process that could take "a couple years," -- Mirage will start thinking about what to do with its new properties. That process itself could take several years, so it could be as many as four or five years before a decision is made on either the Boardwalk or Country Star sites, Feldman said.
As for Country Star, if the restaurant is sent packing by Mirage, it may well move elsewhere, Davidson said.
"We like being in Las Vegas," he said.
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