Monday, June 7, 1999 | 11:32 a.m.
The defunct El Rancho hotel-casino on the Las Vegas Strip may soon be sold, says a Securities and Exchange Commission document filed by former El Rancho owner Las Vegas Entertainment Network Inc.
An LVEN spokesman confirmed that a sale was likely, but declined to elaborate or provide any information on the prospective buyer.
"There are things happening there that will be very newsworthy," said LVEN spokesman Jay Goldberg.
LVEN, based in Los Angeles, bought the closed El Rancho in 1993 for $36.5 million, then re-sold it to International Thoroughbred Breeders Inc., of Cherry Hill, N.J., in 1996 for $43.5 million and a percentage of future cash flow. ITB was later sued by shareholders upset with a 1997 agreement under which ITB issued LVEN 2.09 million ITB shares as compensation for $11.6 million still owed by ITB for the El Rancho purchase.
As part of a January settlement of that suit, LVEN returned the ITB shares, but retained until April 19 an option to re-purchase the El Rancho from ITB. According to a May 19 LVEN filing with the SEC, that option has now expired. LVEN may have to write off $3 million in booked assets that represent a combination of its investment in the El Rancho and money still owed by ITB.
However, states the filing, "the company has been advised that funds have been made available for the purchase of the El Rancho property by a third party from ITB and that the company can expect a fee from such closing."
Goldberg declined to elaborate on the filing. The SEC document continues: "However, there is no assurance that such closing or fee has been finalized."
Goldberg said a deal could be announced within a month. He was unsure how big of a closing fee LVEN would receive from a sale or how the fee would be calculated.
He did say LVEN is negotiating extending the April 19 expiration of its purchase option with ITB, opening the possibility that LVEN itself would purchase and then re-sell the El Rancho, or purchase and own it jointly with the unnamed third party.
ITB officials could not be reached for comment.
The El Rancho was built in the 1940s as the Thunderbird. It later became the Silverbird, and then the El Rancho in 1982. Owner Ed Torres closed the resort in 1992 because of losses.
The first El Rancho, built on the southwest corner of Las Vegas Boulevard and Sahara Avenue in 1942, was destroyed by fire in 1960.
LVEN originally planned to redevelop the El Rancho as El Rancho's Countryland USA. The plan called for two 20-story cowboy boot-shaped hotel towers.
When ITB came into the picture in 1996, the redevelopment plans became much more elaborate. ITB and LVEN decided to redevelop the El Rancho as Starship Orion, a complex that would have included seven separately owned 30,000-square-foot casinos, 300,000 square feet of retail space, 2,400 hotel rooms and science fiction-themed attractions.
The Starship Orion concept was scrapped amid analyst concerns the companies could not realistically raise the $1 billion the project would cost, or that their managers had the expertise to build such a complicated resort. Starship Orion also suffered from a dispute between ITB and LVEN over money ITB claimed it was owed as part of the sales agreement.
The companies later settled that dispute, and in February, 1997, said they would scrap Starship Orion in favor of a revised CountryLand USA. Details of that plan were never released.
If LVEN does choose to write off its El Rancho investment, states the company's May 19 SEC filing, "the company may no longer meet the minimum net worth standards imposed by Nasdaq."
Goldberg said LVEN is in a financing agreement with several unnamed trusts that will provide the company enough money to meet the minimum Nasdaq listing requirements.
Separately, LVEN said it is in an agreement to purchase a 50 percent interest in Sulmatic Administradora De Bens Ltd., a Brazilian company that operates 500 gaming machines throughout Brazil, for $5.5 million. The other 50 percent of Sulmatic is owned by L.G. Cirsa, a gaming machine manufacturer.
At the same time, LVEN said it is in an agreement with MG Marketing under which MG will install 10,000 gaming machines throughout Brazil for LVEN.