NorthStar Realty Finance Corp. and other lenders seeking to foreclose on the Hard Rock Hotel in Las Vegas have reached an agreement with the owners of the financially struggling hotel-casino, according to a Las Vegas-based attorney representing one of the lenders.
The agreement, which was reached over the weekend and announced on Monday, cancels a public foreclosure of the property that had been scheduled for today in New York, said Jeff Silver, an attorney with Gordon Silver, which is representing NorthStar.
Silver said the parties were able to work out a deal to avoid foreclosure that would ensure changes are made to the operations of the Hard Rock to make sure "the owner could service the debt on the property."
"If that means certain management changes ... those things will be worked out between the borrower and the lenders," he said. The Hard Rock Hotel is majority owned by a subsidiary of Credit Suisse AG, while Morgans Hotel Group in New York has a minority position and manages the property.
On Wednesday, $1.25 billion in debt was scheduled to mature. Jennifer Foley, a spokeswoman for Morgans Hotel Group in New York, declined to comment on the company's plans to restructure to extend the debt.
Foley also declined to comment on the deal to avoid foreclosure.
The agreement removes the need for a meeting before Nevada gaming officials in Carson City today to approve Navegante Group of Las Vegas to run the property should the lenders have succeeded in foreclosing on the property.
Silver said the deal was reached after gaming agencies, the Navegante Group, lenders and hotel officials "worked through the entire weekend to reach a settlement."
In a filing with the New York Supreme Court on Thursday, NorthStar argued the "best chance of recovering the largest portion possible of its $95 million loan balance" was to take control of the Hard Rock Hotel.
NorthStar loaned approximately $100 million toward the purchase of the hotel. Other lenders include Brookfield Financial LLC and Vegas HR Private Ltd.
NorthStar claimed that the owners of the Hard Rock missed a monthly payment of $460,000 that was due on Feb. 1, the filing said.
The Hard Rock Hotel was built in 1995 and completed a $750 million renovation and expansion less than a year ago. A joint venture that included Morgans Hotel Group and DLJ Merchant Banking Partners bought the hotel-casino in 2007.
The hotel-casino, with 1,500 rooms and 2,800 employees, recently settled a $650,000 complaint with the Nevada Gaming Commission that employees sold drugs and let patrons use private restrooms for sex and drugs.
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