Five Star Energy Seeks to Acquire Las Vegas Hotel

Five Star Energy Corp. of Calabasas has signed a letter of intent to try to acquire Hotel Nevada Corp. of Las Vegas, which in March filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.

Five Star President Daniel Lezak said he hopes to persuade creditors of the casino-hotel company to accept Five Star stock in exchange for the approximately $4 million that Hotel Nevada owes them. If he succeeds, Lezak said, Hotel Nevada Corp. will become a wholly owned subsidiary of Five Star.

The Hotel Nevada, a 150-room hotel and casino in downtown Las Vegas, sought protection to avert a state-ordered shutdown of its casino.

State gaming regulators ordered the closing after a union won a $240,000 judgment against Hotel Nevada in a pension dispute. Regulators also found the company to have an insufficient cash flow.

According to Nevada gaming officials, Hotel Nevada Corp. is wholly owned by M. Edward Fike, who could not be reached for comment.

Lezak said the two companies’ plans need approval from Hotel Nevada’s creditors and Nevada gaming regulators.

Five Star said in a statement that the move marks “a total shift in emphasis for the company,” which has been chiefly in the oil business.