he us$ 3 billion, 4,000-room hotel and casino development on the remote northern end of the Las Vegas Strip halted construction last spring when banks cut off around us$ 800 million in funding. Around 3,000 construction workers were laid off when the funding dried up. The project is about 70% complete.
On Monday, Fontainebleau owners said in a bankruptcy court filing that it is negotiating with an unidentified party interested in acquiring Fontainebleau's debt. An attorney for Fontainebleau reiterated that in court Wednesday in Miami.
The person with knowledge of the situation said Fontainebleau and Penn National were working on coming to terms. Fontainebleau is also negotiating with two other parties, but those talks are less far along, the person said. Penn National spokesman Joe Jaffoni said he couldn't confirm or deny Penn's interest in Fontainebleau.
Penn National Gaming operates 12 casinos in seven states and a Canadian province, as well as a number of racetracks across the country. With no presence in Las Vegas, the company has been looking closely at a number of options in that city, Jaffoni said.
Buying the Fontainebleau would immediately vault Penn on the industry's center stage, and place it in direct competition with the biggest gambling operators in the world. However, several industry insiders are skeptical about whether an acquisition of Fontainebleau makes financial sense. Even if a buyer assumed Fontainebleau's us$ 1.6 billion debt at a steep discount, it would still cost an estimated us$ 1.5 billion to finish the project.
Analysts say the thousands of luxury rooms to be added soon in the Las Vegas market could dent the potential value of Fontainebleau. Visitation is already sharply down in Las Vegas, and Fontainebleau's remote location on the northern end of the Strip means that, even if it did open, it might struggle to attract patrons.