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Hard Rock is Low on Chips With Debt Payment Due

Stocks in this article: MHGC

Making matters worse on April 24 was BREF's disclosure that its CFO, Marlo Vandemore, had resigned to pursue other opportunities.

In the annual report, BREF disclosed a $105.5 million net loss for the year ending Dec. 31 and a $115.6 million net loss in 2012.

Before the transfer in lieu of foreclosure, the hotel and casino were owned by Hard Rock Hotel Holdings LLC, an entity that was formed by DLJ Merchant Banking Partners and Morgans Hotel Group (MHGC), to acquire the hotel in 2007.

In 2011, Hard Rock Hotel Holdings received a notice from its lenders and its second mezzanine lender, NRFC WA Holdings LLC, declaring all of its debt due immediately. The lenders filed a lawsuit to foreclose on the company's assets in the Supreme Court of New York, but the hotel and casino was later transfered to the new owners instead of the foreclosure moving forward.

Through the transfer, BREF assumed the company's then $862.8 million in debt and secured a new $30 million second-mortgage from Brookfield Financial. The $862.8 million has grown to a $902.5 million debt when interest and other charges are considered.

The $30 million second mortgage, meanwhile, is priced at 15% payable at maturity, which is also March 1, 2018.

The Hard Rock Hotel & Casino has three hotel towers with approximately 1,500 hotel rooms, a 60,000-square foot casino, a Hard Rock retail store, a jewelry store, two clothing stores, a lingerie store, and a tattoo parlor. The hotel and casino also has a special events facility, a nightclub and live music concert hall, among other amenities.

The company, which has 1,397 full-time employees, operates under the Hard Rock brand through a licensing agreement with Hard Rock Cafe International (USA) Inc.

BREF, which has $604.23 million in assets and $804.77 million in liabilities, has a $200.6 million deficit. It has roughly $14 million in cash on its balance sheet, SEC filings said.

A spokesman for Brookfield Asset Management, Andrew Willis, declined to comment.

A spokeswoman for the Hard Rock Hotel & Casino couldn't immediately be reached for comment.

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