Billionaire investor Carl Icahn outbid Penn National Gaming Inc. (PENN) Monday to place a starting bid of $155 million for the Fontainebleau, an unfinished casino hotel in Las Vegas, reports said.\At a Bankruptcy Court in Miami, a subsidiary of Icahn's firm, Icahn Enterprises LP, reportedly started a bidding war in court, leading to its so-called stalking-horse offer of $105 million, plus $51.5 million in debtor-in-possession financing thereby setting the base price for auction. Other bidders could offer more, and Icahn would have the option of topping those bids, reports said.
Wyomissing, Pennsylvania-based Penn stopped bidding at $145 million, including $50 million of such financing, after its initial offer of $101.5 million, reports noted.
Construction was halted on the 4,000-room Fontainebleau Las Vegas resort after it fell into bankruptcy last June. The 63-story Fontainebleau is about 70% complete and sits on approximately 27 acres at the north end of the Las Vegas Strip. It is said, roughly $2 billion has already been spent on construction and development of the Vegas project.
Penn National, which owns casinos and racetracks, last week said it had offered $50 million for the project, plus $51.5 million for debtor-in-possession financing to fund the project's costs until a sale occurs. Penn has estimated that it will cost an additional $1.5 billion to finish.
Reports said Penn decided to stop bidding at $145 billion because the company does not believe the casino-hotel is worth more than the cost to finish the project at a time when gambling and hotel revenues in Las Vegas have fallen amid the downturn.
Icahn has reportedly said in an interview that if he ends up owning the Fontainebleau he may partner with another company to complete construction. He is likely to move slowly on restarting the work, he said.
Icahn in recent years acquired three Las Vegas properties out of bankruptcy, including the Stratosphere hotel and tower in 1998. He sold all three casinos in 2007, plus another in nearby Laughlin, Nevada, to Goldman Sachs Group Inc. for $1.3 billion.
PENN declined $0.07 or 0.25% and closed Monday's regular trading at $27.56. After hours, PENN declined further $0.03 or 0.10% and traded at $27.53.
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