Bank of America has not been accepting of the terms of the financing for the Fontainebleau Casino resort. Currently the $2.9 billion project located on Las Vegas Blvd. has been met with financial challenges, therefore not appearing to be a solid investment on the part of Bank of America.
The Fontainebleau resort was denied a judgment against Bank of America on August 25 as the banks and loan companies canceled $656 million is to be appropriated for construction of the Casino resort. Had Fontainebleau succeeded in their court battle, these banks would’ve been forced to uphold the loans so that the last 30% of construction to be completed.
Since the judgment, there has been a loss of funding for the project and construction has come to a complete stop. The judge suggested that the Casino resort and banks go through mediation in order to resolve their issues, however the two sides were left with a stalemate.
At this point in the process, the best case scenario would be to sell off the property and let another company struggle with the finances to complete the Fontainebleau Casino resort.
The realistic aspect of this sale according to Fontainebleau will be that he’ll be many hurdles to cross before financing will be accepted, the construction completed in the resort ready to be opened. Although this would be a best case scenario for the company, the purchaser would have to go through a lot of paperwork and red tape just push the process through.
As casinos continue to struggle in this economy, the chances of obtaining a financial loan grow more slim as finances continued to dry up. Since many investors are still attached to the project, they would be offered the first opportunity to create a reorganization plan, then the final say would come through the bankruptcy courts.
At this point the new investor has not come forward, however Penn National Gaming has been the company most publicized in showing any interest in Casino resort. Another company, Apollo management LP who has ownership in Harrah’s entertainment could be another possibility.
