Penn Offers $102 Million To Stake Claim In Vegas
Penn National Gaming (PENN: 23.11 0.00%) finalized an agreement with Developer Jeffrey Soffer to stake claim in Las Vegas by purchasing the bankrupt Fontainebleau. While the agreement requires approval from the courts, it was designed to be the “stalking horse” bidder in the auction process.
The Pennsylvania based gaming operator agreed to pay $50 million and provide an additional $51.5 million in loans to pay bankruptcy lawyers, reimburse lenders $18 million in past expenses and allow the release of remaining loan proceeds held in Fontainebleau accounts.
The Fontainebleau Las Vegas has spent $2 billion on construction and development over the past three years before filing for bankruptcy protection. The 63 story resort is approximately 70% built and would cost the new owner an additional $1 billion to complete.
The court has been asked to set a January 15th deadline for other bids and an auction date of January 21. Other interested parties would have to raise the $50 million bid and secure payment to Penn for the new loan. If no other suitors come forward, the Fontainebleau would be required to accept Penn’s opening bid.
Penn reserves the right to increase its bid if faced with competition.
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