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Arnold M. Knightly

PBL signs Vegas deal

1 June 2007

LAS VEGAS, Nevada -- Australia's richest man, James Packer, is bringing his expanding gaming company to the Las Vegas market.

Publishing and Broadcasting Ltd., which Packer controls, announced Thursday it has entered an agreement with the developer holding purchase options for the site of the former Wet 'n Wild water park on the Strip. Packer's agreement calls for him to invest money and operate the Crown Las Vegas casino on the site.

Christopher Milam, the Austin, Texas-based developer who is proposing to build an 1,888-foot hotel tower on the site, confirmed the partnership in an e-mail.

Crown Ltd., a newly formed subsidiary of Publishing and Broadcasting, will operate the casino.

Packer could not be reached for comment.

Gaming Control Board Chairman Dennis Neilander said Packer has yet to apply for a gaming license. He added that he recommends that new applicants apply a couple of years ahead of taking over gaming operations.

Publishing and Broadcasting owns and operates two casinos in Australia: Crown Entertainment Complex in Melbourne and Burswood International in Perth.

In May, Packer entered Asia's growing market by opening the $540 million Crown Macau Casino.

The development is a joint-venture partnership between Publishing and Broadcasting and Hong Kong-based Melco Entertainment. Melco is run by Lawrence Ho, son of businessman Stanley Ho, who owns several Macau gambling halls.

The partnership will likely draw attention from state gaming regulators during Packer's licensing process in Nevada.

MGM Mirage went before state gaming regulators in March to explain its partnership with Pansy Ho, Stanley Ho's daughter, in the MGM Grand Macau.

Packer, who has two more projects opening in the next three years with Lawrence Ho, could expect the same close scrutiny to ensure that Stanley Ho does not directly influence the son's operations.

"We will take a look at all his partners," Neilander said. "It would still be something that we would have to look at."

Stanley Ho continues to fight allegations that his casinos have been involved in organized crime activities including money laundering, drug trafficking and prostitution.

Publishing and Broadcasting paid $22.5 million for a 37.5 percent stake in LVTI, Milam's holding company for the Wet 'n Wild project.

New York-based private equity firm York Capital Management has also been named as a third partner in the project, but its investment stake was not available.

The investment firm did not return calls by press time.

Publishing and Broadcasting Gaming Chief Executive Officer Rowen Craigie said in a statement that Crown was looking forward to working with its new partners on Crown Las Vegas.

The investment money from both parties was partially used to make a $40 million option payment last week to Archon Corp., owners of the former water park site, an investor's note from Bear Stearns gaming analyst Joe Greff shows.

Milam and Archon entered into an option agreement in June 2006 of $450 million for the 27-acre site. The price was recently raised to $475 million to adjust for rising land costs.

Archon, which owns the Pioneer Club in Laughlin, is leasing the site as a construction area for the Fontainebleau.

This is the second investment on the Strip's north end for Packer, who has been vocal about his intentions to grow his gaming company worldwide.

Las Vegas-based Fontainebleau Resorts announced in April that Publishing and Broadcasting was investing $250 million to acquire a 19.6 percent stake in the company.

The $2.8 billion Fontainebleau mixed-use project is under construction and scheduled for completion in 2009.

Crown Las Vegas is announced as a 5,000-hotel-room project with 250,000 square feet of casino space and 625,000 square feet of shops, restaurants, convention area and other amenities.

Milam said he still awaits a Federal Aviation Administration ruling for the proposed 142-story tower.

The project is tentatively scheduled to go before the Clark County Commission in July but could be postponed if there is no FAA ruling by then.

FAA spokesman Ian Gregor said the organization is seeking comments on the proposal from "several dozen people and agencies" including airlines, business organizations, pilot groups and other government agencies. The comments are due June 20.

A final ruling from the FAA is still several months away, Gregor said.

Milam said the building's final design will depend on the FAA ruling. No construction schedule has been announced.

Packer is the son of the late businessman Kerry Packer, who died in December 2005. The elder Packer, a legendary high roller and big tipper, is rumored to have won between $20 million and $40 million over several days at the MGM Grand in 1997 and tipped as much as $1 million at Bellagio.