Castaways fate sealed, bowling alley to be spared - Tuesday 25th of October 2005
Implosion of the derelict Castaways Hotel & Casino could happen as early as January, pending city approval. Once the requisite demolition permits are supplied, LVI Environmental of Nevada is prepared to topple the 447-room hotel tower at the eastern end of Fremont Street.
The property has stood empty since being seized by creditor Vestin Mortgage on January 28, 2004.
LVI received the implosion contract in May or June of this year, according to company President Joe Catania, and demolition of the Castaways ancillary structures began in July, starting with the parking garage. The company has previously handled the implosions of, among others, the Sands, El Rancho, Desert Inn and original Aladdin casinos.
The collapse of the main hulk will be handled in such a way as to preserve the Castaways bowling alley, said Station Casinos spokeswoman Lori Nelson. She wasnt certain exactly how LVI would accomplish this, saying "Thats those guys challenge."
The bowling alley is considered by many to be the casino-hotels primary -- possibly its only -- asset.
As for the fate of the rest of the site, "no decision has been made on what were doing. It wouldnt have met any of our needs," Nelson said of the 51-year-old Castaways tower, because of the way it had been built and subsequently augmented.
"Buildings were just tacked on," said the Station spokeswoman, raising issues of traffic flow and construction quality. "Were master planners in our developments. Its just older buildings," she said of the venerable Fremont Street landmark, "and not much we could use from it."
Nelson added that Station has been studying future uses for the site. One possibility, floated both by Station and others, would be for the company to remove the lands gaming-enabled status and re-sell it - a gambit Station has previously employed at several other parcels around the valley.
Opened in September 1954 as the Showboat, the hotel-casino was the first major gambling venue built away from the the Strip and downtowns Glitter Gulch. Its bowling facilities made it a popular stop on the Pro Bowlers Association tour from 1960 onward, and its second-floor Pavilion hosted boxing, professional wrestling and roller derby events before being converted into a mammoth bingo hall.
The propertys decline was marked by a rapid series of ownership changes. In April 1998, Harrahs Entertainment bought the Showboat Inc., which had grown to include casinos in Atlantic City and East Chicago, for $550 million. The following year, Harrahs sold the Las Vegas Showboat -- which had undergone $25 million in renovations in 1989 -- for $23.5 million to locally based VSS Enterprises.
As part of the transaction, VSS had to remove the Showboat brand, replacing it with the Castaways theme.
In June 2003, the resort sought bankruptcy protection but not before borrowing $20 million -- later to escalate to $22.2 million -- from a consortium of lenders led by Vestin Mortgage, on the basis of a $60 million "as-if developed" value.
The latter, calculated by VSS, was predicated on a $57 million makeover, the acquisition of a Holiday Inn franchise and an 80 to 90 percent occupancy at $65 per night. VSS secured the loan with the Castaways property and with adjacent land leased from Exber Inc. Its position was that the $60 million valuation was conservative and the Castaways was potentially worth $105 million.
In bankruptcy court, Vestin asserted an appraisal -- obtained from another lender -- valuing the Castaways at only $20 million. By then, VSS Enterprises had accrued approximately $50 million in debt. At the time of the casinos subsequent seizure by Vestin, on Super Bowl weekend of 2004, Castaways management left its workforce on the hook for $1.9 in unpaid medical reimbursements, wages and vacation benefits.
Despite a tentative purchase agreement, a planned resale from Vestin to the owners of the Bighorn Casino and Longhorn Hotel Casino was never consummated. Station stepped in last October, paying $12 million to the Bighorn/Longhorn group and another $21.6 million to Vestin.
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