At least one unidentified potential buyer is negotiating to take over the bankrupt Fontainebleau hotel-casino development in Las Vegas.
But significant hurdles still 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.
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, 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.
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.