Venetian hit with more liens

Gary Thompson

Tuesday, Aug. 3, 1999 | 11:24 a.m.

More than $150 million of new liens were filed against the Venetian hotel-casino on the Las Vegas Strip on Monday, raising contractors' claims against the resort well above $210 million.

Meanwhile, Venetian owner Sheldon Adelson told a local political group he still plans to begin construction on another $1 billion hotel tower at the Strip resort site later this year.

"After the openings of Paris-Las Vegas and the Aladdin," Adelson told the Nevada Republican Men's Club Monday, "the only new resort left will be my second phase."

Adelson has said he'll build the Lido, another 3,036-suite hotel tower with 15 restaurants and other amenities, next to the Venetian. But securities analysts say uncertainties over the Venetian's finances and future make raising money for Lido construction an iffy proposition.

Bid prices for the Venetian's only publicly traded securities -- first-mortgage notes and senior subordinated debt totaling about $522 million -- fell another half point today as word began reaching bond traders about the latest lien filings.

"The market in general is confused," said one bond analyst who requested anonymity. "I think things will stay on hold until more information is available."

What's known now is that more than 140 liens totaling more than $210 million have been filed against the Venetian, Adelson and related entities by angry subcontractors who haven't been paid for work on the $1.5 billion resort.

(By comparison, a total of 13 liens were filed against the $1.6 billion Bellagio.)

The largest claimant by far is Lehrer McGovern Bovis Inc., which filed four liens totaling $145 million against the Venetian and various affiliates Monday.

But Bovis, the New York-based firm hired by Adelson to oversee construction of the hotel-casino complex, said it's still willing to discuss a settlement.

"As is typical for a project of this size, there's going to be some disagreements about the closeout of the project," Bovis spokesman Sam Singer said today, sounding a more conciliatory note than in his comments Monday.

"While both sides have recently taken steps to protect their respective legal positions, we'll attempt to negotiate a reasonable, mutually satisfactory resolution of the issues. We'll continue to talk with them," Singer said.

Under state law, contractors have 90 days from finishing work on a project to file liens, thereby reserving the right to pursue other legal remedies in the event they aren't paid or don't settle their disputes with owners. Bovis left the Venetian construction site Saturday, but hasn't been paid any money for more than a month.

On Friday, the Venetian sued Bovis in federal court here, alleging that the construction manager had "severely damaged" the resort's reputation and cost it "substantial income" by failing to complete the project on time.

"This suit is intended to ask the courts to require Bovis to pay its contractors, and to compensate the Venetian for Bovis' failure to perform its other duties," the Venetian said.

The suit claimed Bovis failed to manage and coordinate subcontractors' work, submitted false and misleading schedules and failed to provide monthly progress reports.

Meanwhile, the Nevada State Contractors' Board said Bovis wasn't required to post a bond of more than $50,000 because Adelson didn't require it.

A Bovis subcontractor had complained last week that the lack of a large bond left subcontractors unprotected.

"Bovis got a license here in 1993, and at the time, the highest bonding requirement in the state was $50,000," said Pat Potter, licensing supervisor with the Contractors' Board. "The law was changed last year, and the range is now $1,000 to $100,000."

Potter said property owners can require construction companies they hire to post larger "payment and performance" bonds, but many don't do so because it adds to the overall cost of a project.

Adelson not only didn't require a payment-and-performance bond, but he insisted Bovis demand waivers from subcontractors of their rights to file liens against the Venetian.

Bovis "failed to enforce the waiver of mechanic's liens ... and allowed trade contractors to file mechanics liens in violation of their express representations that there were no claims for matters giving rise to the liens," the Venetian lawsuit said.

In another development, Venetian lawyer David Friedman seemed to distance the resort from lawsuits filed against Bovis by John Prendeville, even though the Venetian's lawsuit contains similar allegations.

Prendeville is a former Bovis executive who alleged he was wrongfully terminated after informing Adelson about certain activities by the construction manager.

In a federal lawsuit, for example, Prendeville claimed Bovis' "monthly schedules are being falsified." The Venetian suit said Bovis "submitted false and misleading schedules."

Prendeville's suit also alleged Bovis manipulated the "guaranteed maximum price" contract it had with the Venetian. The Venetian suit alleged Bovis "knowingly, recklessly or negligently made false written and oral representations" about the project.

Asked whether the Venetian might call Prendeville as a witness against Bovis, Friedman responded through a resort spokesman: "We've had no conversation with Mr. Prendeville related to this lawsuit."

Lawyers for the Venetian, Bovis and Clark County got a District Court lawsuit filed by Prendeville dismissed several months ago. The suit alleged safety and building-code violations at the resort. The state Supreme Court has agreed to review the dismissal.