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Casino Builder Sues Banks for Withdrawing Loans
LAS VEGAS, NEVADA --
Fontainebleau Las Vegas has filed suit against several major banks after it claims they didn't honor commitments to finance its casino project on the Las Vegas Strip. Fontainebleau says Bank of America and others have written obligations to fund the remainder of the gambling complex under construction and are refusing to provide the financing to which they agreed.
JPMorgan Chase, Deutsche Bank, and seven other lending institutions are named as defendants as well in the $3 billion lawsuit. The action came after Fontainebleau tried to draw on an $800 million loan, requesting a $122 million advance. Rather than grant it, the lenders asked for revised information regarding financial estimates and projected condominium sales.
Earnings for Strip casinos have plummeted over the last year, and forecasters are worried the addition of CityCenter and the Fontainebleau later this year will cause further deterioration of the market. Las Vegas real estate has also been locked in a downward spiral.
The refusal of the lenders to allow Fontainebleau to draw against the loan “is nothing more than the banks’ baseless attempt to walk away from the project and abandon their obligations,” Fontainebleau said in its filing.
The Fontainebleau is being erected on the sites which previously hosted the El Rancho and Algiers casinos. The completed version of the casino-resort is expected to have almost 4000 rooms and 1000 condos, 24 restaurants and bars, and 100,000 square feet of gaming space.
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