MontBleu gets assurances; questions surround Horizon

The future of the MontBleu Resort Casino and Spa at Stateline is more settled after an agreement announced last week between the property's owner and the company that owns the land underneath the casino.

The future of the nearby Horizon Hotel and Casino, however, remains uncertain.

To understand the situation, settle in and take a deep breath:

The land under the two casino properties is owned by Edgewood Companies a Minden company that was known until a few months ago as Park Cattle Co.

Beginning in 1989, Columbia Sussex Corp. operated the Horizon. Six years later, Park Cattle tried to evict the hotel operator, contending that Columbia Sussex had operated the property badly allowing mold to develop in rooms and failing to fix a leaking roof, for example.

The casino operator which changed its name to Tropicana Entertainment after it purchased a landmark

Las Vegas property sued, and the case went before a judge in Douglas County in early 2008. After the trial had progressed for several weeks, Tropicana and Park Cattle Co. decided to settle. Tropicana agreed to pay $165 million to its Douglas County landlord.

The 2008 settlement also shortened the lease of the land under MontBleu, which Tropicana began operating after it purchased the former Caesars Tahoe. Originally scheduled to run through 2028, the land lease was shortened by 10 years.

The settlement specified that the lease under the Horizon, meanwhile, would expire in March 2011, although it could be extended for three years, one year at a time, at the option of Edgewood.

Within a few days after the settlement was reached in 2008, Las Vegas-based Tropicana filed for bankruptcy court protection while it reorganized its finances.

New management was brought in to run Tropicana. William J. Yung III, the Kentucky hotel operator who'd moved the company into gaming, went back to the hotel business.

Now Yung is looking to make his return to the gaming industry.

As it wrapped up the details to emerge from bankruptcy, Tropicana Entertainment said last week it signed a new lease with Edgewood Companies for the land under MontBleu. The lease is back to its original term and is set once again to expire in 2028.

Both Edgewood and Tropicana are singing happy songs about the new agreement on MontBleu.

Brad Nelson, the chief executive officer of Edgewood Companies, said the company will continue to work with Tropicana to make the MontBleu into a premier resort destination.

And Scott Butera, the CEO of Tropicana, said the new lease will help his company operate what he called "a highly successful first-class operation at MontBleu."

The tone is different with the Horizon.

Tropicana got the approval of Edgewood Companies to assign the lease of the Horizon property to an affiliate of Columbia Sussex. That's the company run by hotelier Yung, the same guy with whom Edgewood had the dispute that led to the eviction notice four years ago.

The new deal doesn't include an extension of the Horizon lease. It's still set to expire in 2011, with one-year extensions possible.

Yung is taking over operation of the hotel within the next 30 days, but he needs approval of the State Gaming Commission before his company can operate the casino.

In the meantime, the casino is being operated by Tropicana, which laid off 75 of its staff last week. The property shut down its table games last week, although it continues to operate 600 slots.

One possibility that's raised in various documents is that Edgewood Companies itself might end up running the casino when the current lease expires.

The settlement of the court case that was signed in 2008 left the door open for Edgewood to run the Horizon for two years using the property's gaming equipment and furniture after the lease runs out in 2011.

In a press release last week, Nelson said "Edgewood Companies remains steadfast in its desire to ensure the long-term viability of the Horizon property."

He said the company is evaluating its longer-term options for the property. A year ago, an Edgewood

executive was quoted as saying the company might look to redevelop the property for residential and retail uses.

A spokeswoman for Edgewood Companies said last week it may be a year before any decision is announced.

"Edgewood Companies' ultimate goal is to make sure South Lake Tahoe delivers first-class resort properties that reflect the values of the people who live and work there," the spokeswoman said.


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