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Monday, Aug. 17, 2009 | 10:04 a.m.
Sun Coverage
Sun Archives
- Fontainebleau builder agrees to six-month license suspension (8-7-2009)
- Fontainebleau suit against lenders moved from bankruptcy court (8-5-2009)
- Another lawsuit alleges unpaid work at Fontainebleau (7-14-2009)
- Fontainebleau builder says it’s protected from paying severance (7-14-2009)
- Fontainebleau fires back, outlines bank dispute (7-8-2009)
- Fontainebleau developers: Design change could help costs (7-6-2009)
- Court filings shed light on Fontainebleau financing (7-2-2009)
- Practice of building before designs are done hits wall at Fontainebleau (6-28-2009)
- Flood of new hotel rooms dims Vegas outlook for '10 (6-23-2009)
- More subcontractors accuse Fontainebleau of failing to pay for work (6-23-2009)
- Fontainebleau subcontractors want bankruptcy case moved (6-22-09)
- State gaming regulators shied away from policing borrowing (6-21-2009)
- Fontainebleau subcontractors say contractor conflicted (6-19-09)
Progress is being made in court-ordered mediation aimed at settling disputes and lining up new financing so construction can resume on the big Fontainebleau casino-resort in Las Vegas.
That's according to a report issued Friday to a federal judge in Miami who is overseeing a lawsuit filed by Fontainebleau against big bank lenders that this spring halted $656 million in planned funding for the $2.9 billion resort because of cost overruns and other problems.
"On the basis of the proposals exchanged and discussions held to date, the parties to this proceeding and the mediator collectively believe that progress toward a resolution has been made and that the process of mediation should continue," said a report to the judge jointly filed by attorneys for Fontainebleau, Bank of America and other big lenders being sued. "While a resolution is not imminent, it would be unrealistic to expect that resolution of a complex set of disputes involving billions of dollars and the formulation of a business plan for potential completion of the project could be achieved in just over a month’s time."
The filing said parties in the mediation talks have included not just Fontainebleau and the revolving-loan banks led by Bank of America, but term-loan lenders who loaned $350 million to the project and that separately are suing the banks over the banks' cancellation of their funding.
Also participating in the talks are creditors and "two potential third-party investors," Friday's court filing said.
"The mediation process to date largely has focused on attempting to craft a business solution for completion of the Fontainebleau Las Vegas project and for a resulting release of all claims of the parties against each other in both this proceeding and the term lenders' action (lawsuit against the banks), although other less complex settlement structures also have been proposed," the filing said.
Miami businessman Jeffrey Soffer, developer of Fontainebleau, has expressed interest in pumping additional capital into the bankrupt project, according to court filings by his attorneys.
The potential third-party investors have not been identified, but sources have said private equity group Apollo Global Management LLC as well as Penn National Gaming have expressed interest in the 3,815-room project on Las Vegas Boulevard.
Apollo, one of the investment companies that owns Harrah's Entertainment Inc., is believed to have purchased some of Fontainebleau's debt.
It's unclear whether the proposals on the table involve an equity investment that would keep Soffer in control of Fontainebleau, or whether one or more investors would assume control of the bankrupt project, said to be 70 percent complete.
Court papers show the backdrop of any potential settlement is that under its current capital structure, Fontainebleau doesn't make economic sense because:
-- The banks say that its appraised value of $1.764 billion is far less than the additional $1.5 billion needed to complete the resort and what lenders are already owed, meaning the owners have negative equity. This in part is due to the weak economic climate that prompted Fontainebleau to suspend plans to sell condominium units at the resort, which would have covered substantial construction costs. The resort, if completed, may also struggle to line up retail tenants because of the weak economy.
-- Difficult business conditions in Las Vegas, where casino resorts have racked up hundreds of millions of dollars of losses this year because of a decline in visitation to the city -- a situation likely to worsen when the massive CityCenter complex begins to open in December and other room capacity additions come online.
And besides the interests of term and bank lenders, contractors' liens against Fontainebleau may need to be satisfied and second-mortgage holders owed $675 million will have to be dealt with.
Even if they get it finished and open, how will it make any money?
IMO, It's a money pit any way you cut it.
What kind of a newspaper does not report the death of Son of Founder Fontainebleau from Ft Lauderdale murdered, This paper deserves to belly up.
Maybe turn it into a Motel 6?
ugly, ugly building right next to the riviera, maybe the ugliest "resort" on the strip.
Make it a special brothel and pot zone. People can engage in prostitution and smoke pot while staying in this hotel. Travelers can go to Amsterdam, go get some hash, and some prostitutes, Thailand, Cuba, Japan, GB, Germany has legal prostitution. The fanny pack demographic is gone, they have no money in their houses or IRAs. We need more vice, that's what the did in the 30's when they legalized gambling.
Hey mred, we don't have gambling, it is gaming, so never expect to be able to take advvantage of odds like the house, if you win anything it is because they let you. If any honest person wanted to try to get a license to operate gambling hall, they would be turned down.
Right on mred! Amsterdam dude!
So SteveM,
Maybe I'm confused, are Excalibur, Harrahs, Tropicana, IP, Riviera not resorts??
While Fontainebleau isn't as good looking as CityCenter or Wynn the reason why it looks like a brick is because they are going to project stuff on the hotel every night which is awesome and a cut above most resorts.
Great news. Can't wait to see it completed. It looks pretty good and different from the rest of glitzy kitschy resorts.
If the finish it up and open it at least it can offset some of losses...that is unless it is more expensive to run compared to leaving it unfinished.
The casino who will offer the lowest room rate, super deals on buffets for food, low cost for shows, etc, should attract the parties who are thinking about coming to Vegas. Which casino is willing to give it back to their customers hoping that whatever left in their pocket will be gambled away, just like in the 80's and 90's. They might not be making the profit they did in the 90's up till '06, but they've got to start somewhere to get people wanting to come back to Las Vegas because there are "DEALS" here. Sure it might take a while, but they've got to start somewhere.
Sure, dollarbillz.
I don't think the Fontainebleau or City Center portrays the "themed" resorts of revamped Las Vegas. Vegas needs to remain different and exciting in how it looks and what it offers. I don't care to see Houston or Atlanta or Chicago-type architecture in Vegas... I can visit those respective cities. However, regardless of the architecture, Vegas MUST BE a place where spending (losing) money is fun, exciting and offers some value. We visitors do not need more Fontainebleau types (high end)... we need places like the imploded Stardust. It is impossible to offer deals to visitors when the cost of construction and the cost of maintaining is in the billions. We love you Vegas... please return to some sense of normalcy!
These "Indian Casinos" have no taxes. Look at all the add on fees: sales tax, energy fees, entertainment taxes, etc. They don't have free alcohol, but free soda pop, coffee, so people BYOB and spike their own drink. Some of the same entertainers hit the Native Casinos. and a lot less gas for someone driving from LA, and less traffic... Vegas can't compete, and what about the Internet gambling? Vegas will be in the pits til the big wigs change to embrace the new market realities...and the goody-two shoes at Metro don't help the situation...
3000 romms sitting there empty... why finish it so 3000 romms can sit there empty??
I agree w/ vicprobey that features like the ability to project images at night on the tower's facade may make the project more appealing and cutting edge than what we as laypeople observers can know at this point. I suspect there is a lot of top drawer stuff in the design. Fwiw, Glen Schaeffer, who has a great deal of experience in building megaresorts, was the brains behind Blue. While Glen was on a learning curve w/ Excalibur and Luxor, he really put together a great project at Mandalay Bay. Think what one might about him, but he's a very talented guy. While he walked away from Blue and his own investment in it because the economic conditions went south, I would be surprised if it's not a very compelling design owing to his involvement.
They may raise the money to finish the project but they will end up in bankruptcy. It's only inevitable as they will not be able to sustain a room rate adequate to pay their debt load. There are already too many hotel rooms on the strip.
How many people to staff this place?
What kind of a newspaper does not report the death of Son of Founder Fontainebleau from Ft Lauderdale murdered, This paper deserves to belly up.
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I heard nothing!! Where can I find this story???
Geenab65---you won't make it to 70 unless you learn how to write a simple sentence in the English language.
Get the place open as soon as it can, so we could get 20,000 people from California every month to by all of the foreclosed homes.
Geenab65---you won't make it to 70 unless you learn how to write a simple sentence in the English language.
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Vegas222
What part of my big English words did your wittle head not understand?