The hotel expansion will bring 875 additional rooms, 60,000 sf of meeting space, 35,000 sf of retail, a new spa and a new nightclub. The new hotel rooms will come in two new 15-story towers, one on the existing casino-hotel property that will have 500 rooms and one 400-room, all-suite tower on a piece of the adjacent 23 acres that were included in the sale. The project also includes a renovation of the existing facilities including and an expansion of the casino and pool.

Recent renovations to the existing property include upgrades to existing suites, a new Ago restaurant and the new Wasted Space Lounge Bar. Other improvements to be completed in 2008 include the expansion of the Nobu restaurant and a new poker room. The hotel expansion is slated for completion by mid-2009.

New York City-based Morgans and DLJ Merchant Banking Partners acquired the gaming resort here early last year for $770 million. It immediately took over hotel operations but had to farm out the casino operation until it gained an operator's license from the Commission. Morgans began operating the casino this past February.

Morgans agreed to acquire the assets of Hard Rock Hotel Inc. from Peter Morton in May 2006 and added DLJMB as an equity partner prior to closing the deal. MHG put up one-third of the acquisition equity, which is approximately $57.5 million, and DLJMB is funding the remainder, which is approximately $115 million. The remainder of the purchase price consists of a $760-million loan for the acquisition. The initial term of the loan is three years, with a possible extension of up to two terms of one year each under certain conditions.

The interest rate on the loan will be 415 basis points above 30-day Libor, subject to increase if the completion date of the expansion project is delayed and under certain other conditions. The security for the loan includes the hotel & casino, the Hard Rock Cafe property, the adjacent parcel, the intellectual property and certain reserve funds and accounts.