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June 4, 2012

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Company that planned Strip properties may seek bankruptcy

By (contact)

Tuesday, April 14, 2009 | 4:57 p.m.

FX Real Estate property

Sun coverage

FX Real Estate and Entertainment Inc. of New York said Tuesday it may file for bankruptcy protection following the collapse of its plans to build celebrity-themed properties in Las Vegas and other cities.

The company, owner of a parcel of land at Las Vegas Boulevard and Harmon Avenue, across the Strip from the CityCenter development, said that on April 9 it was served notice by lenders that they plan to auction the property at a trustee sale because FX is in default under a $475 million loan secured by the property. FX said last month that $454 million was owed on that loan.

FX on Tuesday said it and its Las Vegas subsidiaries are considering all possible legal options, including bankruptcy proceedings, in light of a May 18 deadline to resolve the default. FX said it has no way of making payments to become current on the loan. As for legal action, including bankruptcy, it said it "cannot guarantee to what extent, if any, such actions may be viable or effective."

FX in recent years has been promoting plans to build properties with Elvis Presley and Muhammad Ali themes and has been paying royalties to Elvis Presley Enterprises and Muhammad Ali Enterprises. Those licensing deals were canceled last month amid FX's financial troubles. Its plans in Las Vegas for a Presley-themed hotel-casino never got off the ground.

The Las Vegas property consists of six parcels totaling 17.72 acres that have in recent years been occupied by small retailers and restaurants such as the Harley-Davidson Cafe and Smith & Wollensky.

Because the recession has essentially brought Strip land sales to a halt and as financing has dried up for commercial projects, FX said it has written down the value of the Las Vegas property by $325 million to its current estimated value of $218 million.

Because of that write-down, and the licensing fees paid to the Presley and Ali companies, FX said it lost $462 million on revenue of $6 million in 2008.

FX also said Tuesday that its stock will soon be delisted by the NASDAQ Stock Market because it no longer is in compliance with a requirement that it have at least $10 million in stockholders' equity.

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