Icahn wins auction to buy Fontainebleau for $150 million

Billionaire investor Carl Icahn this morning officially won the auction to buy the stalled Fontainebleau Las Vegas with a bid of $150 million, which includes $105 million in cash.

The U.S. Bankruptcy Court in Miami’s approval was expected after the examiner disqualified two competing bids that he said didn’t meet certain qualifications.

The sale is expected to close on Feb. 9.

Examiner Jeffrey Truitt said in court filings that the two other submissions received by the Jan. 15 deadline didn’t include a required deposit.

The court was told this morning that 157 parties were contacted about bidding on Fontainebleau, but only eight signed confidentiality agreements.

Icahn told the Review-Journal last week that he would wait for the Las Vegas gaming market to settle before deciding how to proceed with the project.

A representative of 17 labor unions that saw 3,000 of its members laid off in late April when the project was closed described Icahn’s takeover of the project as promising.

“From a Building Trades perspective, this is the step in the right direction instead of sitting there in bankruptcy,” Southern Nevada Building and Construction Trades Secretary-Treasurer Steve Ross said this morning. “We’re being optimistic and positive about it because now somebody actually’s got it. Somebody with a proven track and he’s been successful with properties before. Hopefully, by the second quarter this year maybe we’ll have some activity going on.”

The 3,889-room Fontainebleau filed for Chapter 11 bankruptcy June 9 after nearly $800 million in funding from the lenders was pulled.

The project cost more than $2 billion and was about 70 percent complete when construction was halted, according to its original developer, Miami-based Fontainebleau Resorts.

The Fontainebleau once had a construction budget of almost $3 billion. Analysts project it will take at least a $1 billion to finish construction of the project.

Fontainebleau Las Vegas was designed as a hotel-condo-casino project with a large retail center, restaurants, spa and other amenities.

Ross estimated it would take a year to finish construction on the 27-acre site if Icahn decides to complete the entire project.

Although the unions have not had any direct discussions with contractors or Icahn about restarting the project, Ross said Icahn could choose to complete some components of the project, such as the casino and some hotel rooms, but delay building out others such as the 300,000-square-foot retail center.

“Because of the size of the project, there’s a lot of tenant spaces,” Ross said. “You want to fill those tenant spaces with store owners as well, but are they financially viable to go in there. There’s a lot of variables out there.”

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.