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Gaming Guru

Arnold M. Knightly
 

Fontainebleau working on funding with bank

29 April 2009

LAS VEGAS, Nevada -- One of the banks being sued by Fontainebleau Las Vegas broke its silence Tuesday to say it's negotiating with the developer to help finance the unfinished $3.1 billion project.

Bank of America spokeswoman Shirley Norton released a statement confirming the bank "continues to have discussions with Fontaine- bleau Las Vegas regarding a restructured financing for the project."

Fontainebleau spokesman Dave Satterfield confirmed that the developer is "in constructive conversations" with the bank, but "expectations have not changed regarding this issue" of funding.

Bank of America and 10 other lenders last week notified Fontainebleau that it was in default and that the lenders would not make a prearranged $800 million loan to complete the project.

Fontainebleau's developer responded with a $3 billion lawsuit claiming there was no default and accusing the lenders of executing "a vain attempt to escape their obligation."

The developer said the banks' action is jeopardizing the project, which is 70 percent completed.

"We expect Bank of America, JPMorgan Chase, Deutsche Bank and all of the other lenders on the revolving credit facility to abide by their contractual commitment and fund the $800 million we need to get this project completed," Satterfield said Tuesday. "We're in the final stages of construction and it's in everyone's interest -- our lenders, investors, employees, contractors and the citizens of Nevada -- to complete this project."

The 3,815-room hotel-casino is scheduled to open in October on 24 acres along Las Vegas Boulevard near the Riviera.

A spokesman for the project Tuesday said that while the developer still hopes to open in October, he cautioned that pushing back the opening date is a possibility.

Satterfield said the developer is looking at "alternative forms of financing in the event that the banks are not forthcoming with their commitment."

But additional funding won't be coming from Australia-based gaming company Crown Ltd. The company, controlled by billionaire James Packer, paid $250 million in April 2007 for a 19.6 percent stake in the resort's parent company.

"Crown Limited has no interest in contributing more cash to the project," Crown spokesman Gary O'Neill said in an e-mail late Tuesday. "We have no management role in Fontainebleau and, as we have previously announced, we have written down our investment."

JPMorgan Chase and Deutsche Bank declined comment Tuesday because of the pending litigation.

The other banks being sued are Barclay Bank, The Royal Bank of Scotland, Sumitomo Mitsui Banking Corp., Bank of Scotland, HSH Norbank AG, Camulos Master Fund, and MB Financial Bank. Merrill Lynch Capital Corp. was also named in the lawsuit, but that bank was acquired by Bank of America in September.

The developer said Friday it has $130 million available to continue funding the project, which employs 3,300 construction workers. An additional 1,700 tradesmen are expected to be hired in the next few months to complete the project.