Casinos: CityCenter Makes Conde Nast Traveler's "Hot List", Harrah's to Sell Rio?, Boyd Throws Station Reorganization Plans into Limbo

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Yep, you heard me right... MGM Mirage finally got some good news for CityCenter. Conde Nast Traveler has put both Aria AND Mandarin Oriental in its "2010 Hot List"! Apparently the rooms, the art, the restaurants, and the green touches all make Aria a winner in its book (even if Vegas Tripping and Rate Vegas' TWHT weren't as impressed initially). And since Conde Nast Traveler is quite revered as an authority on luxury travel, perhaps it can help encourage more of those high-end travelers needed to come and help CityCenter turn a profit?

Meanwhile in Harrah's territory, they may be considering (AGAIN!) selling The Rio. But unlike past rumors, which were just glorified gossip, this time it's getting press in Bloomberg Businessweek.

Harrah’s Entertainment Inc., the casino company owned by Apollo Management LP and TPG Inc., is seeking bids for the Rio All-Suite Hotel & Casino in Las Vegas, people with knowledge of the situation said.

Starwood Capital Group LLC and Colony Capital LLC are among the companies that are weighing bids for the resort, said the people, who declined to be identified because the talks are private. Some bids value the Rio at about $500 million, two of the people said.

Harrah’s, the world’s biggest casino company, is exploring a sale of the off-Strip property two months after buying Planet Hollywood Resort & Casino. Las Vegas is coming out of a two-year slump that took casino operators to the brink of bankruptcy. Chief Executive Officer Gary Loveman cut Harrah’s debt by $4.2 billion in 2009 by offering creditors new bonds at a discount. He extended maturities on another $5.5 billion this year.

Dave McKee has more on this, including his thoughts on who might be the early favorite to snatch The Rio. He thinks Colony Capital (which currently owns The Las Vegas Hilton, as well as a chunk of the possibly-soon-to-emerge-from-bankruptcy Station Casinos) is the frontrunner, followed closely behind by Starwood Capital Group (which currently owns Sheraton, Westin, St. Regis, and a number of other hotel brands). However someone in the comments there mentioned the constant rumor that Penn National Gaming (which came close to buying the bankrupt Fontainebleau, which ended up in Carl Icahn's hands) may get it, which is always a possibility considering how badly it wants to enter the Las Vegas market.

So will The Rio be banished from Planet Harrah's? We don't really know yet, since the company isn't saying anything... Yet. But since Harrah's has already tried multiple times to sell The Rio, I wouldn't be surprised if they finally let it go this year.

And finally, speaking of Station Casinos, its long, hot mess of a bankruptcy isn't over quite yet... Boyd Gaming and the unsecured creditors are challenging the reorganization plan! They specifically object to the proposed PropCo/OpCo plan to let Station keep Red Rock, Sunset, Palace, and Boulder along with the proposed "Viva" site and the Las Vegas Blvd/Cactus Ave. plot of land while putting all the other assets (or OpCo) into "auction". Boyd and the creditors are claiming that the "auction" process and PropCo/OpCo divide put Station and Colony at an unfair advantage over everyone else (including Boyd, which badly wants to buy as much of Station as the Nevada Gaming Commission will allow).

Oh, and a group of independent lenders is also objecting to Station's plan.

"By excluding OpCo assets of significant value, as well as the PropCo assets, from the proposed Station Casinos sale, the debtors are not allowing their assets to be shopped as their fiduciary duty requires," Boyd charged in court papers.

Boyd also noted that its offers to purchase Station assets in February and December 2009 were not accepted. The last offer for the entire company was for $2.45 billion.

"We now know that the debtors were only interested in pursuing an insider transaction at the expense of their creditors' interests in breach of the board's fiduciary obligations," Boyd's filing said. "The court should not sanction the debtors' ongoing blatant disregard for the creditors' interests by approving these one-sided bidding procedures."

Similar objections were filed Wednesday by the case's Official Committee of Unsecured Creditors, representing bondholders and others owed some $2.5 billion. The unsecured creditors charged that the Fertittas and Colony Capital have arranged to acquire a 50 percent interest in the PropCo properties at a 15 percent discount while arranging a lucrative 25-year management deal for those properties.

"These series of transactions are structured, using New PropCo and Fertitta Gaming, to camouflage the conflicts of interest and self dealing that are at the heart of the ... plan," attorneys for the unsecured creditors charged.

"The proposed restructuring is simply a deliberate campaign by those controlling Station Casinos to benefit themselves, its equity owners, at the expense of Station Casinos' creditor constituents," the creditors charged.

Another objection was filed by a group of independent lenders, which also complained that assets crucial to the operation of the OpCo casinos would not be included in the OpCo auction.

"From the perspective of the OpCo creditors, the process makes no sense: It's like selling KFC without the Colonel's secret recipe, or selling Coke without the formula, because the seller fails to capture the full value of the enterprise and the buyer acquires a business crippled without its competitive advantage," the lenders charged.

So will all their objections be enough to derail the Fertittas' plan to take Station out of bankruptcy? We'll have to wait and see.

Carl Icahn Starts Bidding War for F-bleau

Oh, this may start to get fun...

Investor Carl Icahn today offered $141 million to buy Fontainebleau Las Vegas, outbidding Penn National Gaming.

Penn National has not yet disclosed whether it will offer a higher bid.

Icahn's bid was presented to Fontainebleau's bankruptcy judge today, and a hearing on the issue was under way in the afternoon Miami time.

Penn National last week offered $101.5 million -- $50 million in cash and a loan of $51.5 million.

An attorney for Fontainebleau, Scott Baena, told Bankruptcy Judge A. Jay Cristol today that Icahn initially offered a bid last week exceeding Penn's bid by $25 million. He said Penn National then matched that higher bid.

Icahn then offered another $10 million today, bringing his bid to $136 million, Baena said.

During today's hearing, an attorney for Penn National left and called his client, returning with a bid $500,000 higher than Icahn's and sweetening the deal with other provisions. An attorney for Icahn then countered by boosting Icahn's bid by $5 million to $141 million.

Yep, the legendary Wall Street investor/takeover expert now wants in on the action at F-bleau. At the very least, that should make the bankruptcy proceedings that much more interesting.

And don't be surprised if Icahn actually gets it. Remember that just last year he sold his interest in The Stratosphere, Arizona Charlie's (both locations), and The Aquarius in Laughlin. He's no stranger to casino gaming, so it will be fascinating to watch him open F-bleau should his bid succeed.

I guess if anyone can turn a profit on The Fontainebleau, Carl Icahn can. Let's see if Penn National steps up its game and offers more to finish what's fast becoming the most ridiculous boondoggle ever seen on the Las Vegas Strip.

Penn National DOES Want F-bleau, After All

I guess this is good news?

Penn National Gaming Inc. on Monday made a $50 million "stalking horse" bid to buy the stalled Fontainebleau casino-resort in Las Vegas, with plans to spend another $1.46 billion to complete the project.

Penn's offer, filed in Miami's bankruptcy court, sets in place an auction process in which other investors will have an opportunity to bid for the property.

Fontainebleau also said in a court motion Monday that Penn National and unnamed lenders have agreed to provide $51.5 million in debtor-in-possession financing to cover its costs since filing for bankruptcy and to keep the company afloat during the sales process.

Court papers indicated Penn National has committed $50 million to buy the project, less unspecified "remediation costs" and costs to cure defaults on leases and contracts it would inherit.

The Penn affiliate offering to buy the project is Nevada Gaming Ventures Inc. Penn for some time has been looking at opportunities to enter the Las Vegas gambling market, the nation's largest.

Now $50 million seems like small change for such a massive Strip resort... But let's remember just how all of this got started. This place has been one hot mess for quite a while, and Penn will still need to settle at least $350 million in debt and spend another $1.46 billion just to finish this resort.

But attorneys for Fontainebleau said they're hopeful Monday's bid is not the only offer for the project, which was developed by affiliates of Miami-based Turnberry Associates. Turnberry is known in Las Vegas for developing high-rise luxury condominiums and the Town Square Shopping Center.

"The debtors are both hopeful and optimistic that finalizing the purchase agreement marks the beginning of a competitive sale process that will drive substantial incremental value to the debtors' estates and their creditors over and above the purchase price offered by Nevada Gaming Ventures," Fontainebleau attorneys said in Monday's court filing.

Once valued at $2.9 billion, $1.675 billion has been borrowed against the 3,815-room Fontainebleau, where construction shut down this summer after Bank of America and other big banks canceled a loan agreement because of cost overruns and other problems.

This may be the end of the line for Turnberry's Las Vegas operations. At the very least, I'm not expecting any more Turnberry projects on or near The Strip any time soon.

But hopefully, this will be a much needed turn of the page for F-bleau. It needs to be finished ASAP to start making money. And if Penn succeeds in gobbling it up in bankruptcy court, then Penn will be getting it in a real steal of a deal! I hope they'll finish F-bleau soon enough so that it won't be just another North Strip "abandoned construction" eyesore. Hopefully by late 2010 and early 2011, the economy will have recovered enough to absorb the new rooms online.