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Tuesday, Sept. 15, 2009 | 9:16 a.m.
Sun Archives
- Fontainebleau contractors seek lien claims in state court (9-14-2009)
- 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)
At least one unidentified potential buyer is negotiating to take over the bankrupt Fontainebleau hotel-casino development in Las Vegas, Fontainebleau reported Monday.
But significant hurdles remain for the resort to be sold and its construction completed, including difficulties a buyer may have in obtaining financing.
Stung by substantial losses on Las Vegas casino and real estate deals, banks and investors have been wary about investing in Las Vegas during the recession -- especially with a growing over-supply of hotel rooms on and around the Las Vegas Strip.
In an emergency motion Monday seeking court approval to pay salaries and maintain the stalled, 70 percent-complete resort, Fontainebleau sought access to $3.73 million through Oct. 5 "to preserve and protect the project pending the negotiation of a transaction with a potential buyer."
Fontainebleau also indicated it's less likely it will succeed with efforts to force Bank of America and other big banks to continue financing the $2.9 billion resort on Las Vegas Boulevard.
Fontainebleau noted a federal judge on Aug. 25 denied Fontainebleau's motion for summary judgment in its lawsuit against Bank of America and other revolving-loan banks that this spring canceled $656 million in funding needed for construction. The failed summary judgment motion would have forced the banks to provide the funding.
The banks have said Fontainebleau had defaulted on the loan agreement because of cost overruns and other problems. The loss of funding led to the resort's bankruptcy and the decision to halt construction on the project.
Before the Aug. 25 ruling, the court had ordered the banks and Fontainebleau to mediate their dispute, but the mediation appears to be going nowhere.
"It seems less likely that the mediation process will result in a global resolution," Fontainebleau said in its court filing. "Thus, the debtors have been intensely focused on forging a transaction to facilitate completion of the project independent of resolution of the revolver (bank) litigation," Fontainebleau said. "These discussions are encouraging. Indeed, just this afternoon, the debtors received preliminary draft term sheets for debtor-in-possession financing and for a sale transaction."
Fontainebleau, however, cautioned the sale of the project would be a complex transaction complicated by its inability to include the resort's separately-financed retail component in the bankruptcy and "the difficulty that any purchaser will face in the current credit environment obtaining financing to complete the project."
Besides these factors, any sale would be subjected to scrutiny by bank and investment company lenders, bondholders and contractors -- groups each owed hundreds of millions of dollars.
These creditors would have the opportunity to object and offer their own reorganization plans for the project, with the bankruptcy court having the final say.
While the potential buyer for Fontainebleau has not been identified, the companies most mentioned as being interested in the deal are Penn National Gaming, which has been looking for an opportunity to expand to Las Vegas; and deep-pocketed Apollo Management L.P. -- one of the companies that controls Harrah's Entertainment Inc.
yeh hey let apollo buy it,they saved a bunch of $ when they demanded thier hourly employees 2 accept a pay cut or lose their jobs,"deep-pocketed" as they r
PNG
The economy will bounce back. Government spending created many jobs in the Great Depression, Hoover Dam for example. Some paint that as socialism, others as a wise public investment -- found a cool site; Balkingpoints ; incredible satellite view of earth
its beyond the point of no return - they (someone) has to finish it and get it open. It cant just sit there..but then again,,,,,,,,
Those thinking about long-term recovery, know the enviroment will be a big winner in the conversion to biofuels & biopower.
This project reminds me of the Aladdin.
Its like I said earlier. Someone will wait until the price is at rock bottom, then swoop in and buy it up and open it when things get better.
It's really a sign of the recession ending here in Vegas. The prices are either close to rock bottom or are there already, so company's are swooping in to expand while its cheap.
What about Jack Binion?
Everything is fine. Sleaze Harry Reid said the DEPRESSION will be over in 2010. That's not the year he is running? BTW what happened to the new veterans administration complex?
Dodgerchuck -
Apollo is a joint partner that owns Harrah's Entertainment.
Let's use this analogy: Mr. A and Mr. TP buy a pizza restaurant - The restaurant is doing well and then the economy goes south. Instead of pouring more money in the restaurant they ask the manager Mr. G to attempt to cut costs while attempting to keep the customers. Mr. G does an ok job at cutting costs and keeping customers.
Mr. A has an opportunity and the finances to purchase a second restaurant at a distressed price. Mr. A needs a good manager, he talks to his partner and they come to the agreement that Mr. G will manage the new restaurant and the proceeds from managing the new restaurant will go back to Mr. A and Mr. TP's first restaurant.
I know there are a lot of Harrah's haters that post here because of the cost cutting measures and some very serious management mistakes. But Harrah's like them or hate them has managed very well through the recession.
I would not be surprised if Apollo gets control of the property and Harrah's manages the property under a management contract. I also would not be surprised if the property was branded as a Horseshoe brand.
Just my take.
We should change the city's name to Harrahs, Nevada 89---.
PNG... Done Deal.
There are two ways to sell this big, blue Titanic.
Under Section 363 of the Bankruptcy Code, Fontainbleau's owners can ask the bankruptcy court to approve the sale of the property to a cash buyer "free and clear of liens". That term used to mean the buyer had to pay the total sum of the liens on the property, including both the two warring factions of the first mortgagees, the second mortgagee and the mechanics lien claimants. But now, after the Chrysler Bankruptcy Court opinion, approved by the Second Court of Appeals and tacitly by the Supreme Court (which refused to stop the sale), owners of sinking ships can now sell properties free and clear of liens if the buyer is paying appraised value and if the majority of the mortgage lienholders agree. So, don't be surprised if mention of this sort of fire sale happens.
Fontainebleau's owners have 120 days from their bankruptcy filing date (June 9, 2009) to file a proposed Chapter 11 plan describing how the property will be refinanced, the existing senior lenders paid in some part, and the junior mortgagee and the mechanics lienholders hosed. A Chapter 11 Plan proposed by the company's owners with the support of some of the first mortgage holders seems unlikely at this point, because their bankruptcy file shows that not only are they at war with the Bank of America faction of the first lien mortgage holders (the Revolving Lenders), they are now on the outs with the other first lien mortgage holders (the Term Lenders).
As a result, after than 120th day, it would not be surprising to see the Term Lenders or even the group of mechanics lienholders come into the bankruptcy court, with their own Chapter 11 Plans to sell the property.
Which gets back to the critical question. Given the high cost to finish building this hotel, furnish and equip it, and run an intense promotional effort to attract hotel guests and gaming customers, and given the troubles of the other casinos in town which are not in prime locations, does the Fontainebleau have any fair market at all?
If the answer is no, the first lien mortgage holders called the Term Lenders may simply ask the bankruptcy judge for the right to foreclose, leaving the fight with the local mechanics lien claimants to the title insurance company which made the ill fated decision to issue an insurance policy telling and insuring the Term Lenders that their mortgage has first lien priority over the local mechanics lien claimants.
I sure hope that title insurance policy wasn't issued by that big title insurance company that went bankrupt about 10 months ago!
Chazbean asked what happened to the new Veteran's Hospital which our esteemed members of Congress have said will be built in North Las Vegas.
It sure would be interesting to see if the Federal government could buy the Fontainebleau and turn it into a big Veterans' Hospital. If they got it for the same price they were going to pay build the new Veterans Hospital in NLV, it would be a bargain. I bet Veterans would want to come from all over the USA to be treated there!
Here is a map of who own's what here on the Vegas strip. As one can see, buying PH would give Harrah's a solid block of property to work with in the future.
http://www.vegastodayandtomorrow.com/mon...
I live by Losee/215. The Veteran's Hospital is under construction and much of the building is constructed already. It is a pretty good size hospital with lots of property fenced in.
Just blow it up.
FB was just a bad, bad idea gone really bad. Too bad.
I hope whomever gets this project gets it at good price. I hope Soffer get's it the ass big time along with his rich a_______e buddies.The guys that were handed life on a silver platter and live off their fathers accomplishments in life. The kind of guys that race offshore boats and act like the rich and famous.
In America we have a standard which a firm handshake,a straight look in the eye and that go gettem attitude will win respect and a place at the top.I can't help of thinking of all those good tradesmen and thier families going broke because of these rich kids liveing the dreams through their fathers hard made companies.I wonder how much respect they would give you! I think most would love a chance to take you to the wood shed!
Im sure the economy played a part in the Bleau fiasco but poor management, poor engineering and the misconception of what the banks responsibilites were did also! Wasn't it the responsibility of Turnberry to read the fine print before entering this big of a ventue.