18 floor Paradise Tower at the Hard Rock Hotel & Casino, Las Vegas. (PRNewsFoto/Hard Rock Hotel & Casino)
Brookfield Asset Management Inc. and Warner Gaming LLC have assumed ownership and operational control of the struggling Hard Rock Hotel and Casino in Las Vegas.
Last month, state gaming regulators approved the takeover plans, which were subject to several conditions, including the surrender of escrow and loan documents to make sure that Morgans Hotel Group Co. is out for good.
The Hard Rock had been struggling to meet its obligations on $1.25 billion in debt. After the deal closed last month, the Hard Rock will have a restructured debt obligation of $898 million.
Under the agreement, ownership of the property will transfer to LVHR Casino Inc., a subsidiary of Brookfield, while management will be transferred to Warner Gaming. When Gaming Commission Chairman Peter Bernhard expressed concern that Warner might not be up to the task of running the off-Strip resort, founder William Warner said his 14 years with Station Casinos has fully prepared him for managing a property the size of the Hard Rock.
Under the new structure, a manager with Brookfield told regulators that the $178 million loan owed to the company would be turned into an equity stake. Once ownership and the property’s gaming license are transferred, DLJ Management and Morgans Hotel Group will no longer have a financial interest in the property, said Brookfield’s Andrea Sue Balkan.