Two Way Hard Three | Las Vegas Casino & Design Blog

Two unrelated stories from the Las Vegas Sun.

First off, it seems Moody's are saying that Fontainebleau might be in trouble if they can't sell condos (insight!):

Then we also have Harrah's, a company struggling to avoid bankruptcy. They're attempting to re-structure their debt to avoid that scenario.

Let the good times roll!


Read archived comments (9 so far)
March 5, 2009 10:11 AM Posted by parchedearth

So we now have Station, MGM, LVS, Harrah's, Fontainbleau, Herbst, Riviera, Crown, Tropicana, Trump, Hooters, and Arizona Charlie all with publicly disclosed debt problems. I'm betting Boyd has the same debt problem and is making a last ditch effort to raise cash flow with the Station offer. That leaves only Wynn and Palms as currently safe, although they could be in trouble if this gets worse and lasts more than a year. Most of these companies are headed to bankruptcy even if they shed assets and start shuttering nonperforming properties. Maybe we should start a list of doomed properties; i.e. those that will never finish construction and those that will close down. This is going to be a wild ride and we should see a whole new set of owners emerge in the next year.

March 5, 2009 12:34 PM Posted by doc_al

Strange question - would a company be at a competitive disadvantage if they didn't default and restructure their debt and all their competitors did?

March 5, 2009 4:21 PM Posted by Hunter

Actually, that's a great and fascinating question.

I think you could make an argument that indeed they could be at a disadvantage, assuming the terms of the restructuring were apples to apples.

March 5, 2009 8:16 PM Posted by DavidF

With the Residences/MGM Signature condos now available as low as $189,000 for the Studio (With apparently several to choose from at that price) and the 1 Bed Suite from $285,000, and the last time I checked, the only way you are going to be able to purchase any sort of Hotel- Condo right now is to pay cash, F-Bleu must be hoping for a miracle.

Did anyone every hear anything else about the law suit filed against MGM claiming the Signature was pushed as an investment, I remember at the time speculating that it would fail, because I couldn’t believe that MGM/Turnberry would not have slipped some sort of Mandatory Binding Arbitration Clause in the contract.

March 5, 2009 9:02 PM Posted by GregoryZephyr

Re: competitive disadvantage. It depends what your time horizon is. Much like a homeowner whose house is foreclosed, there will be problems obtaining credit in the future. But not necessarily forever. A company with enough cashflow to fund operations could conceivably default or go into bankruptcy and come out operationally stable. However, they can kiss goodbye near term future credit that could have been used for expansion. A company that restructures debt but does not default will maintain a better credit rating and could take on more debt in the near future if the economy starts to turn. Alternatively, a publically traded company that defaults or bankrupts will likely face difficulty attracting additional investment compared to one that is able to restructure even if the restructuring terms in the short run look more burdensome than default or bankruptcy. Basically the choice is bankruptcy/default=immediate financial benefit and long term financial harm. Restructured debt=immediate financial hardship but longer term is a financial positive.

March 5, 2009 9:32 PM Posted by PeterF

What are the chances that more of the City Center buildings will be finished on the outside and sit unfinished and empty on the inside?

March 6, 2009 1:15 PM Posted by BillyInLasVegas

Well the CityCenter buildings might not open but they're already finished on the inside.

The second that cement is dry they start working on all the stuff inside,actually if you're in a Bellagio Spa Tower room facing Vdara you can already see all the rooms are ready to go.

In fact don't be surprised if Vdara has a soft opening before the rest of CityCenter.

March 6, 2009 10:55 PM Posted by joe

This is off topic (as always) but, I saw Singfried and Roys last show on 2020 and was surprised it was held at the Bellagio instead of the Mirage! Boy do many people miss the old Mirage. Mabe in 10 years, a new owner will restore the place and bring its glory back (and probably even set the standard again)!! Lol!

March 7, 2009 5:06 PM Posted by LeoNYC

Joe, here is something you may enjoy. This is a video from 1996 where you can see Bellagio being built and The Mirage dominating Las Vegas skyline. Funny to think this was only 13 years ago...