The legal team for the Fontainebleau Las Vegas is negotiating to auction it off with a starting bid that would amount to only pennies on the dollar for the unfinished and bankrupt casino hotel.
Scott Baena, the Miami bankruptcy lawyer representing the Vegas Fontainebleau says that casino owner Penn National Gaming has offered to pay less than $300 million for the Fontainebleau Vegas, a project that has already spent about $2 billion.
Baena said in a court hearing Monday that Penn would bid less than $300 million for the property but he did not say how much less.
The market value of the construction site was appraised at less than $400 million.
Penn bid for the Vegas Fontainebleau would offer a set a minimum price for the 3,889-room hotels for sale.
This Penn bid is the beginning of a process and common for hotels for sale.
The completion of the Fontainebleau Vegas could cost another $1.5 billion. The property already carries $1.6 billion in construction debt.
In exchange for this bid by Penn they will finance the Vegas project's bankruptcy expenses. Lenders are pushing bankruptcy Judge A. Jay Cristol to shift the bankruptcy case from Chapter 11 reorganization to Chapter 7 liquidation through a court-ordered sale.
The lawyers argued Soffer has too much personal exposure in the venture to negotiate a sale that would be fair to the lenders.
Penn is a publicly traded company that is headquartered in Wyomissing, Pennsylvania and owns 11 casinos across the country. The Fontainebleau would be its first Vegas property.
That the June Chapter 11 filing was a result of construction overruns and a collapsed Vegas condominium market which hindered financing plans for the $3 billion Vegas project and banks cut off $800 million in funding this spring.
As the economy began to sour last year, Soffer sold a 50 percent stake in the Fontainebleau Miami Beach for $375 million to an arm of the Dubai government, and then transferred $200 million of the proceeds to the Vegas project.
The Vegas bankruptcy is not associated with The Miami Beach property.
Contributed by MLR Realty
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