Aztar Renegotiates Extension of Option for Tropicana Las Vegas Site
PHOENIX, Feb. 2 /PRNewswire/ -- Aztar Corporation (NYSE: AZR) today announced that the company has renegotiated the extension of its option to acquire the Jaffe family partnership interest in the Tropicana Resort and Casino in Las Vegas. The new agreement gives Aztar until as late as February 1, 2002 to exercise an option to purchase the Jaffe family partnership interest for $120 million.
The exercise of the option and the purchase of the Jaffe interest would give Aztar 100 percent ownership and control of the 34-acre site at "The New Four Corners" of the Las Vegas Strip, at the intersection of Tropicana Avenue and Las Vegas Boulevard. The Tropicana Resort and Casino is owned by a partnership in which Aztar holds a 50 percent stake and affiliates of the Jaffe family of Chicago hold a 50 percent stake. The property is leased from the partnership and operated by Aztar.
"The Tropicana offers a magnificent opportunity for the eventual development of a major new casino resort," said Paul E. Rubeli, chairman of the board, president and chief executive officer. "This revised option agreement gives us great flexibility in determining how and when to capitalize on this unique asset, without requiring a major capital investment up front. By having an option available until 2002, Aztar has up to three years to assess how well the new capacity in Las Vegas is absorbed before making the commitments necessary to redevelop the Tropicana site.
"At the Tropicana, our goal is to generate operating cash flow that will cover our annual carrying costs of approximately $13 million," Rubeli continued. "These costs consist of third-party rent, and principal and interest servicing partnership debt of $60 million. On Aztar's balance sheet, excluding current assets, the Tropicana represents under $50 million of invested capital. Accordingly, Aztar has limited exposure in the Las Vegas market while the current wave of new megaresorts comes on line."
The amended agreement modifies an option agreement announced in February 1998. The new agreement provides for the payment by Aztar of $2.0 million for an option extension to purchase the Jaffe interest through August 1, 2000, to be followed by another option extension through February 1, 2002 upon payment of an additional $1.0 million. |
