Riviera Holdings Corporation Files For Chapter 11 Bankruptcy Reorganization

LAS VEGAS, July 12 /PRNewswire-FirstCall/ -- Riviera Holdings Corporation (Pink Sheets: RVHL), along with certain of its subsidiaries (collectively, the "Company"), today announced that it has filed for protection under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada in Las Vegas (the "Bankruptcy Court").  The Company has filed its bankruptcy cases in conjunction with a restructuring and lock-up letter agreement entered into with certain senior secured lenders holding over a majority in amount of secured creditor claims under the Company's $228,000,000 Credit Agreement dated as of June 8, 2007, and corresponding secured hedging agreement.  Through bankruptcy, the Company anticipates that it will be able to restructure its indebtedness, provide for investment of new capital into the Company, and emerge in an improved financial and operational position.  

The Company has filed various first day motions with the Bankruptcy Court that, with the Bankruptcy Court's approval, will allow the Company and its subsidiaries to continue to conduct business as usual without interruption.  During the Chapter 11 process, the Company expects to continue normal operations under the direction of its existing management team.  The Company anticipates that it will continue to pay employees and vendors, and honor customer deposits and commitments without interruption or delay.  However, the Company's management strongly believes that any recovery for equity holders in the Chapter 11 process is highly unlikely, and under the terms of the restructuring and lock-up letter agreement, the equity holders' interests in the Company will be cancelled and will receive no distributions.

In a statement, Tullio Marchionne, Secretary and General Counsel of the Company, noted, "After extensively considering various alternatives and consulting with our advisors, we have concluded that the Company and its customers, employees and creditors are best suited at this time by proceeding with these Chapter 11 filings.  By agreeing with our secured lenders in advance, we will be able to proceed with an expeditious restructuring through bankruptcy which will provide us with a viable capital structure, as well as additional financing.

"We, like many others in the gaming industry, have been affected by the current economy.  However, both our Las Vegas and Black Hawk properties are generating positive free cash flow and this, combined with our cash balances, will help insure that we continue to pay all our operating costs on a timely basis and fund maintenance capital expenditures. There will be no effect on our employees, vendors, and most importantly, our customers.

"Furthermore, our ability to reach a mutual agreement with our lenders as to the restructuring provides us with a great advantage that most debtors in bankruptcy are not so fortunate to have.  It is our expectation that the Chapter 11 cases will proceed before the Bankruptcy Court in a prompt manner. We believe that by restructuring our debt in coordination with our lenders we will emerge with a capital structure which will enable the Company not only to survive, but to grow as the economy recovers.