Execs leave in shakeup at LV firm

On Stage Entertainment Inc., the publicly traded Las Vegas entertainment company that produces Imperial Palace's "Legends in Concert" impersonator show, is reorganizing and will shed some of its theaters to focus on show development.

Several top executives left the company as part of a strategic shift and management restructuring announced today. The company now plans to concentrate on producing shows in venues On Stage may not own.

"Our objective is to take the creative genius of John Stuart and combine that with the turnaround expertise of David Connelly," said Alan Kau, an investor relations officer for the Las Vegas-based company.

Connelly was named acting chief operating officer/chief financial officer for the company as part of the announcement today. Connelly, a seven-year veteran of Universal Inc.'s music and concert business, is considered an expert in strategic planning, finance, operations and turnarounds.

Leaving the company were President David Hope and Kiran Sidhu, senior vice president and chief financial officer. Kau did not disclose details of their departure.

Kau said the company is "concentrating on the entertainment side and getting out of real estate." Connelly is expected to develop a plan to sell some of the theaters the company acquired when it bought several companies' assets and consolidated them.

In 1998, the company acquired four properties from Gedco USA Inc. for $14 million in cash and stock.

"Based on recent appraisals, it appears we now have a fair amount of undervalued real estate assets on our books," said Stuart, the company's chairman and founder. "However, in hindsight, it is clear that we were not adequately capitalized to fully implement this strategy.

"Rather than pursuing asset-intensive real estate based acquisitions, we plan to grow theatrical productions and expand into new markets, leveraging our creative skills through strategic alliances and joint ventures," Stuart said.

In connection with the entertainment focus, the company promoted Gary Panter to senior vice president of theater operations, taking over daily operations of productions east of the Mississippi, and hired Brian O'Connor as regional director of operations for the company's Orlando, Fla., properties.

The company hasn't determined which properties it would sell. It operates theaters in Orlando and Southern California, but the company's signature productions are its "Legends" shows.

The Imperial Palace presentation is the longest running independently operated show in Las Vegas and has been on stage about 15 years.

In addition to the Legends show at the Imperial Palace, the company has had similar productions running in Bally's Park Place in Atlantic City, N.J., the Surfside Theater in Myrtle Beach, S.C., the Legends Family Theater in Branson, Mo., and at the Estrel Residence & Congress Hotel in Berlin.

There are 13 Legends shows in operation throughout the world, each incorporating the impersonation theme and each in a tourism mecca. More than 6,000 people see a Legends show each day and annual ticket sales are more than $100 million.

"We feel there are some theaters we can liquidate very favorably," Kau said.

He said the company is expected to expand the number of employees as it develops more productions.

On Stage announced the new strategy in the wake of financial woes disclosed earlier this summer. The company failed to sell 2 million shares of its common stock in private placements in a bid to raise $1.5 million in July.

In June, First Security Bank sued the company and several subsidiaries in Clark County District Court, alleging they defaulted on a $1.03 million loan and several lease agreements totalling $925,913.

First Security accused On State affiliates of transferring the company's assets, which are pledged to First Security as collateral, from one entity to another without adequate consideration.

On Stage earlier defaulted in June on a $14.15 million debt to its mortgage lender, Los Angeles-based Imperial Commercial Credit and Investment Corp. On Stage had used a $20 million credit line in 1998 to acquire several productions and properties.

An inability to secure financing halted On Stage's attempts in April to acquire the entertainment division of Casino Resource Corp. of Ocean Springs, Miss., for $13.8 million.

On Stage's first-quarter 1999 net losses widened to $884,000, from a loss of $529,000 a year ago.

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