After failing last month to make a scheduled interest payment, the owner of two Atlantic City casinos has begun debt-restructuring negotiations with its lender.

In a sign of deteriorating financials, Resorts International Holdings, which owns Resorts and the Atlantic City Hilton, also informed employees that it will no longer match employee 401(k) contributions beginning January 1.

Resorts International is owned by Colony Capital LLC, a Los Angeles real estate investment firm. In Las Vegas, Resorts owns the Las Vegas Hilton.

In November, Resorts reported a decline of 62.3 percent in gross operating profit for the third quarter, to $3.3 million, from the same period a year earlier. The Hilton reported gross operating profit of $3.3 million, down 73.3 percent from the same period in 2007.

From January through October, casino revenue was down 14.9 percent at Resorts and 15.7 percent at the Hilton.

With smaller gaming floors and fewer hotel rooms than other casinos in the city, the two properties are finding it hard to remain competitive. The Hilton's casino floor is 60,000 square feet and has 809 rooms, the fewest in the city. Resorts' casino floor is 99,951 square feet; it has 942 hotel rooms. The Borgata, on the other hand, which has weathered the economic storm better than other properties in Atlantic City, has a casino floor twice as large as Resorts', and offers almost 3,000 rooms.

By Casino Connection Staff