Penn National Gaming Talks Fontainebleau

LAS VEGAS-Speaking at length Wednesday regarding his company’s effort to acquire the stalled $3-billion Fontainebleau development out of bankruptcy, Penn National Gaming chief executive Peter Carlino assured analysts on the third quarter conference call that the company will not go out on a limb to acquire the 63-story, 3,800-room casino resort that stands 70% complete at the north end of the Las Vegas Strip.

“First thing I’ll tell you is we have not lost our sense,” he said. “It’s a very complicated bankruptcy and we have spent a very considerable amount of time examining the situation. We have boots on the ground that for months now have been very carefully evaluating costs and the status of the building–what it will take to secure it, what it will take to finish it.”

Analyst Bill Lerner of Union Gaming Group has estimated it would take approximately $2 billion to buy out the existing project debt at a steep discount and finish construction. The existing project debt is approximately $1.5 billion and the estimated cost to complete the project is also $1.5 billion, according to multiple reports. Carlino didn’t dispute that figure when it was brought up again by an analyst on the conference call. Penn National has made an offer–reportedly less than $300 million–to the debtors and several key creditor constituencies to provide a ‘debtor in possession’ loan and serve as the stalking horse in an auction of the project.