(RTTNews) - Penn National Gaming, Inc. (PENN: News ), an operator of gaming and racing facilities, said Tuesday that it has offered $50 million for the unfinished Fountainebleau casino-resort project on the Las Vegas strip. The company's offer would serve as the opening bid at a bankruptcy auction of the project. Penn has also agreed to provide debtor-in-possession financing of about $51.5 million to complete the unfinished work on the project.

The Fountainebleau Las vegas resort was initially forecast to cost $3 billion to build and was about 70% complete when its developers filed for Chapter 11 bankruptcy protection in June. The lenders who had agreed to provide final-stage financing for the project, cut off around $800 million in funding last spring. The lenders claimed Fontainebleau Las Vegas LLC had defaulted on its credit agreement.

Wyomissing, Pennsylvania-based Penn National Gaming operates 12 casinos in seven states in the U.S. and a Canadian province, in addition to several racetracks across the country. With no presence in Las Vegas, the company has been looking closely at a number of options in that city.

In a filing with the U.S. Securities and Exchange Commission or SEC, Penn said that one of its indirect subsidiaries, Nevada Gaming Ventures, Inc. or NGVI, has entered into a "stalking horse" asset purchase agreement, and a debtor-in-possession credit agreement with the lenders. The agreements require the approval of the court overseeing Fountainebleau's bankruptcy proceedings.

As the stalking horse bidder, NGVI's offer to purchase the project would be the standard by which any other bids will be evaluated. The sellers have agreed to request that the bankruptcy court set a deadline of January 15, 2010 for other bids and schedule the auction for January 21, 2010.
Penn said that on approval of the DIP credit agreement, NGVI will be committed to provide the resort with a revolving credit facility of about $51.5 million through February 9, 2010. The DIP credit agreement requires the resort to spend any amount borrowed under the agreement to complete the unfinished buildings at the project and on other budgeted expenses.

PENN closed Tuesday's regular trading session at $28.93, up $0.22 or 0.77% on a volume of 0.55 million shares.

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by RTT Staff Writer

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