Financier Carl Icahn has offered $156.5 million to acquire the partially built Fontainebleau Las Vegas resort, which has been stalled in bankruptcy court since June, according to the resort's chief operating officer.
At a bankruptcy court hearing today in Miami, Icahn bid $105 million plus $51.4 million of debtor-in-possession financing, said COO Howard Karawan.
Penn, which said last week it had offered $50 million plus $51.5 million of DIP financing for the Fontainebleau, dropped out after raising its bid to $145 million, said Penn spokesman Joe Jaffoni.
Both bids are dwarfed by the $2 billion that has already been spent on the 3,800-room casino resort, which sits toward the northern end of the Las Vegas Strip. The property is slated to go to auction in January.
Icahn, whose bid would likely represent a stalking horse floor for the auction, was not immediately available for comment.
Initially, nobody wanted to play the stalking horse ... the bid has now doubled, Karawan said. We still have 60 days to run before the auction.
He said Fontainebleau's representatives have had meetings with more than 40 other interested parties.
Penn National, which owns casinos and racetracks throughout the United States, but not in the gambling centers of Las Vegas and Atlantic City, has estimated it will take at least another $1.5 billion to complete the Fontainebleau resort, which is about 70 percent finished and partly exposed to the elements.
Penn's decision to drop out of the initial bidding is in line with the company's previous expressions of reluctance to overspend in a market still reeling from the impact of the global economic recession.
While many scenarios could still play out, today's action underscores Penn's financial discipline, Barclays Capital said in a research note.
Icahn acquired the Strip's Stratosphere hotel and casino out of bankruptcy in 1998, but sold that property in 2007, along with three smaller casinos, to Goldman Sachs Group Inc
(Reporting by Deena Beasley; Editing by Tim Dobbyn, Andre Grenon and Richard Chang)