Hilton Warns of Larger Loss
Shares of Hilton Hotels Corp. sank Thursday after the company said it will report a larger than expected fourth-quarter loss of about $75 million.
The loss is related largely to one-time charges of approximately $200 million in the wake of Hilton’s recent takeover of Bally Entertainment Corp. In one case, Hilton said it will take a $125-million charge to retire $1.1 billion of Bally debt and refinance it at substantially lower interest rates
In addition to one-time losses, the Beverly Hills-based hotel and gaming company continued to be dogged by poor results from its baccarat casino games in Las Vegas, where the company’s losing streak will reduce profits in the fourth quarter by approximately $25 million.
“It’s a tough business. It’s a volatile business,” said Hilton spokesman Marc Grossman of the high-stakes baccarat games. Grossman said the head of Hilton’s gaming division, former Bally Chairman Arthur Goldberg, will be reviewing the baccarat business to find ways to reduce the volatility.
On the New York Stock Exchange on Thursday, Hilton shares closed down $1 at $25.375.
For 1995, the company reported a fourth-quarter profit of $63.1 million.
In addition to the one-time charges related to the Bally debt, the company also announced other extraordinary losses, among them $20 million to open its Kansas City Riverboat, $11 million to relocate its New Orleans riverboat to Shreveport, La., and $7.5 million to cover changes to employee pension plans.
Despite the company’s quarterly loss, many industry analysts remain optimistic about the company’s prospects. The merger with Bally has made Hilton the world’s largest gaming company, gave it a much needed presence in Atlantic City and boosted its ranks of seasoned gaming executives and management.
