Wednesday, Nov. 21, 2001 | 10:51 a.m.
Las Vegas developer Capital One LLC won the bidding Tuesday for the bankrupt Vacation Village hotel-casino, agreeing to pay $17.8 million for the property on the south end of the Las Vegas Strip.
Shawn Scott, the owner of Capital One, said he hasn't determined what he will do with the 24.9-acre, 315-room Vacation Village. But he said he will "make every effort to keep Vacation Village open in the short term, while developing a long term plan."
Capital One is also buying the Flamingo Reno hotel-casino from Park Place Entertainment Corp.
"We're going to analyze our options over the next few weeks," he said. "Vacation Village offers a tremendous amount of development potential because of its size and location. This will allow for significant development. A gaming hotel is probably one of the best uses on the south end of the Strip."
Scott beat out 12 other bids, made by bidders who didn't identify themselves, for the property.
Meanwhile, problems with Scott's sale of a Louisiana racetrack called Delta Downs to Boyd Gaming Corp. of Las Vegas aren't expected to affect his purchase of Vacation Village, a Capital One officer said.
Eric Nelson Auctioneering, the court-appointed auctioneer of Vacation Village, said a portion of Vacation Village's gaming equipment, which comprises 700 slot machines and 10 table games, was also sold for $146,375 at the auction.
Several secured creditors including International Game Technology, Community Bank of Nevada, Atronic Casino Technology and Anchor Gaming took back more than 400 slot machines and other gaming equipment that had been sold to Vacation Village because bids for the equipment didn't exceed their individual "credit bids" for what was owed, said Aleda Nelson, president of Eric Nelson Auctioneering.
Eric Nelson, the auctioneer's broker, said the gaming equipment's sale is subject to approval by the U.S. Bankruptcy Court, but he said no hearing dates are scheduled as yet.
"The secured creditors are owed more than $24 million. Under the terms of the Chapter 11 restructuring plan, the $17.8 million and a majority of the $146,375 will go to the secured creditors, which leaves little or nothing for the unsecured creditors," he said.
Some 157 unsecured creditors are owed $856,000, Bankruptcy Court filings say. Vacation Village listed assets of $148.7 million and liabilities of $21.3 million when it filed for bankruptcy one year ago.
"Some of the unsecured creditors may challenge the sale but they have no grounds because the plan is already approved by the bankruptcy court. The plan was reached with an understanding that there's a possibility the unsecured creditors may not get paid," Nelson said.
Gerald Gordon, attorney for Wells Fargo subsidiary Foothill Capital Corp., the hotel-casino's largest creditor that's seeking to recover a $24 million loan plus interest, said Foothill will get the "entire $17.8 million."
Gordon said Vacation Village still owes about $6.2 million. "There's still some other collateral (owned by the Heers family, owner of Vacation Village) that we're looking at to settle the debt."
Vacation Village filed for Chapter 11 bankruptcy protection after it was sued by Foothill for allegedly failing to repay a $19.4 million one-year loan at an interest rate of 14 percent when it came due on Sept. 14, 2000.
Meanwhile, many of the 350 Vacation Village workers are anxious as they await Capital One's plans for the casino.
Betty Wunsch, a casino floor person who's been with Vacation Village for about eight years, said the sale was upsetting.
"It's in God's hands now. It'll be hard to find jobs. I've heard the (newly-opened) Palms (hotel-casino) is now full and no longer hiring."
Slot supervisor Leana Whalen agreed. "We thought Vacation Village was going to pull out of the auction. The (Vacation Village) owners kept us working when they could have laid us off after Sept. 11. They've even hired about 10-12 workers (laid off from other casinos) as replacements after the attacks."
American Wagering Inc.-owned Leroy's Sports Place, which operates 43 Leroy's Race and Sports books in Nevada, said it's concerned about the fate of its sports book at Vacation Village.
Tim Lockinger, Leroy's secretary-treasurer, said at the auction: "Our lease expires in 2003. This sports book has been a very good property for us. The locals are a good clientele and if Vacation Village closes, the locals will lose the only sports book amenity in the south side of the Strip. The next closest sports book is at Mandalay Bay. But it doesn't really cater to the locals."
Real estate analysts and developers were mixed about the property's acquisition price. David Atwell, a Las Vegas hotel-casino broker, said $17.8 million was the "right price." He said he had initially expected the property to fetch $15 million-$16 million, partly because of the height restrictions imposed by Clark County on the upward expansion of the property which he said affects the value of the property.
But David Gaffin, a manager of developer Howard Bulloch's Desert Land LLC, said the property could have "gone for more because of the scarcity of land zoned and available for gaming."