James Packer’s Las Vegas Nightmare Just Got Worse
James Packer's largest investment in the gambling mecca is in dire straits after a US casino development company in which his Crown had invested defaulted on $US800 million in loans.
Eleven of Fontainebleau Resorts' lenders withdrew their financing to the company's Las Vegas project last week.
Crown invested $US250 million with Fontainebleau Resorts for a 19.6 per cent stake last year.
This has already been partially written down due to plummeting property values on the Las Vegas Strip.
Details of the default came to light when Fontainebleau sued the lenders for $US3 billion on Thursday in the Nevada district court.
It argues that unless it has the bank funding the $US3 billion casino and hotel project, situated opposite the Circus Circus casino on Las Vegas Boulevarde, is "doomed to failure". The banks allege that the company defaulted on the loans by breaking one of the terms of the loan, a claim Fontainebleau denies.
Crown has had a bad run of luck in trying to break into the coveted Las Vegas market.
Attempts to build the world's tallest casino in Las Vegas failed last year due to financing problems and in March Crown pulled out of a deal to buy the Cannery casino group at the 11th hour, settling instead for a much smaller stake.
Crown was also burned by its previous investment alongside the Californian private equity firm Colony.
Crown paid $242 million for a 4.9 per cent stake in Station Casinos at the top of the market in 2007 and the company now concedes it is "pretty much" worthless.
Station Casinos, which owns 13 casinos in Las Vegas, is teetering on the edge of bankruptcy.
On April 1, Station said it had failed to pay interest to holders of $US450 million in notes.
Source: Sydney Morning Herald
