Penn Outbid For Vegas Venue
Last week Penn National Gaming (PENN: 29.65 +2.74%) announced that they had finalized an agreement with developer Jeffrey Soffer to purchase the bankrupt Fontainebleau Las Vegas for $101.5 Million. The deal had been submitted to the bankruptcy court for approval, but on Monday the gaming company was outbid by billionaire Carl Icahn.
After an extensive bidding war at Monday’s hearing, Penn dropped out after a final bid of $145 million plus the agreed upon $50 million debtor in possession financing. Icahn’s final offer was approved by the court to be the stalking horse or opening bid for the auction process at $156 million. The accepted offer includes $105 million cash purchase plus a $50 million loan.
The original agreement made between Penn and Soffer included a $1.5 million separation fee payable to Penn if the deal was not finalized.
On Friday a group of contractors for the resort claiming to be owed $424 million had petitioned the courts to look into Penn’s bid, claiming that it did not encourage other bidders and would be looking into making a credit bid for the property.
Penn had planned to finish the venue estimated to cost an additional $1 billion to complete with an unidentified partner. The casino operator was hoping the purchases would allow them to stake claim in Las Vegas.
Penn stock fell 7 cents yesterday to close trading at $27.56. The shares have gained 29% this year and opened the market today at $28.05.
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