RiverNorth Opportunities Fund, Inc.

For Q3 2008, consolidated net revenues were $40.2 million, down $12.2 million, or 23%, from $52.4 million a year earlier. Adjusted EBITDA was $4.4 million, down $5.9 million, or 58%, from $10.3 million. The company reported a net loss of $3.5 million versus a net loss of $18.3 million in Q3 2007; the prior-year quarter included a $7.5 million unrealized loss on derivatives and a $12.9 million charge for retiring 11% notes, while Q3 2008 included a $615,000 unrealized gain on derivatives. For the nine months ended September 30, 2008, net revenues were $133.8 million, down $24.3 million, or 15%; adjusted EBITDA was $23.5 million, down $12.6 million, or 35%; and the company reported net income of $826,000 versus a net loss of $12.1 million a year earlier. CapEx for the first nine months was $21.3 million, cash and cash equivalents were $20.5 million, and the company drew $2.5 million on its revolver during the quarter. Management expected no significant CapEx in Q4, said 2009 would start with only emergency CapEx, and guided to roughly $1 million a month in the last six months of 2009 if cash builds and markets stabilize.

Bill Westerman framed the quarter as very difficult and said management responded by aggressively cutting labor and other operating costs to preserve cash and profit. He said the company has paused the room renovation project after finishing four of five towers and spending $18.7 million in 2007 and 2008, with about $4.3 million needed to finish later when conditions improve. On Colorado, he was cautious about the referendum changes, saying Riviera did not support them and would wait to see what local governments actually implement before expanding table games.

Phil Simons highlighted the hard numbers: Q3 consolidated net revenues of $40.2 million, adjusted EBITDA of $4.4 million, and a $3.5 million net loss, with nine-month net income of $826,000. He reiterated that derivative accounting created distortion, citing a $11.7 million long-term swap liability at September 30 and a $615,000 unrealized derivative gain in Q3. He also said capital expenditures were $21.3 million for the first nine months, cash from operations was $7.2 million for the nine months, cash and cash equivalents were $20.5 million, and the company drew $2.5 million on the revolver but did not expect to borrow more. He described 2009 CapEx as minimal at first, with only emergency needs in the first half and possibly about $1 million a month in the second half if cash permits.

Analysts focused on Colorado’s new gaming rules, 2009 convention pricing, cash flow, maintenance CapEx, and how the Las Vegas construction environment was affecting business. Management said the Colorado changes could help slot play through higher limits and longer hours, but they were not ready to predict profits and would wait for local approvals and the July 1, 2009 effective date. On convention demand, they said 2009 bookings looked roughly flat year over year and pricing was unlikely to rise in a highly competitive market. They also disclosed Q3 Las Vegas EBITDA by month as $337,000 in July, $1.6 million in August, and about $980,000 in September, and said construction impacts were easing as exterior work wound down.