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Thursday, April 30, 2009 | 11:41 a.m.
A Fontainebleau Resort spokesman today said construction workers are being laid off because of financing problems at the $2.9 billion resort on the Strip.
Spokesman Dave Satterfield said some subcontractors are cutting staff, leaving them with only skeletal crews, although construction on the resort is continuing. He didn't know how many workers have lost their jobs because of funding concerns.
Fontainebleau is continuing to negotiate with Bank of America for financing.
"This is affecting people's livelihoods like we said it would," Satterfield said.
The banks were sued last week by Fontainebleau, which is planning to open this fall, after allegedly declaring a default on the part of Fountainebleau. Fontainebleau is accusing them of breaking the terms of the $800 million loan agreement.
"The subcontractors' decision is to be expected given that the banks abandoned their lending commitment. This development underscores how vital it is for the banks to meet their contractual obligation to fund Fontainebleau Las Vegas," Satterfield said in a statement.
In its lawsuit, Fontainebleau says it attempted in March to draw $670 million available under its revolving loan, along with another $350 million available under a term loan. Bank of America refused and Fontainebleau resubmitted its request, this time arguing that the revolving funds, according to the loan agreement, should be made available once the term loan was fully drawn. Bank of America refused again and Fontainebleau eventually requested only the amount available under the term loan.
Ugliest
Building
Ever.
At least the subcontractors are learning their lessons, and won't be trapped into continuing work with no idea if they'll get their monthly requisition paid. Many of them have heeded the lesson of the Venetian in the 90's, where so many subs got Sheldoned. This state has pitiful laws when it comes to mechanics liens, so the owner can refuse to pay, and the General doesn't pay the subs. Same thing at Vantage Lofts in Henderson, where one contractor got stiffed for one million smakeroos.....
Well it is our own faults that these banks are doing what they are doing, Everyone hears how greedy they are but we keep giving them our paychecks!!! I say CREDIT UNION! They are stable and they are member owned! Take your money back and join a credit union!!!!!!
What can the contractors do when even the banks are going belly up?
Maybe harry Reid can force the banks to loan money like he and his buddies did with the home mortgages. That will help everything get better.
How does a piece of junk like that cost $3 billion?