Penn National Gaming trying to buy Fontainebleau

Penn National Gaming reportedly is in talks to acquire the bankrupt Fontainebleau project although analysts Friday were skeptical that the regional casino giant would complete a deal for the stalled Strip resort.

Pennsylvania-based Penn National, which operates casinos and race tracks in smaller markets, has openly said in the past year that it was interested in acquiring a Strip resort. The company has been linked to numerous properties, including hotel-casinos operated by MGM Mirage and Harrah’s Entertainment.

The company has more than $1.5 billion in cash, the result of break-up fees from an aborted private equity takeover attempt last year.

However, analysts doubted the company would use those funds to acquire the $3 billion, 4,000-room Fontainebleau, which halted construction in the spring when the resort was nearly three-quarters of the way complete. Banks cut off some $800 million in funding and stopping work on the project and putting some 3,000 construction employees out of work.

“Penn has done some work looking at Fontainebleau, much as it has looked at many property acquisition candidates over the last year,” JPMorgan gaming analyst Joe Greff told investors after the Wall Street Journal Friday quoted a source close to the negotiations who said that Penn National has been in talks to acquire the property for the past three months.

Reuters also reported Friday that Penn National is one of at least two companies discussing taking over the unfinished project.

“We believe that today’s news is old news and somewhat off the mark,” Greff said. “As such, we ascribe a low likelihood to Penn’s buying Fontainebleau.”

Penn National spokesman Joe Jaffoni said Friday the company’s policy is to not comment on rumors and speculation. However, he said the casino operator continues to have a strong interest in gaining entry to the Las Vegas gaming market.

Stifel Nicolaus gaming analyst Steven Wieczynski said Fontainebleau doesn’t fit Penn National’s tastes. The company, he said, would rather purchase an already operating hotel-casino.

“Penn would be acquiring a property that sits in a somewhat remote location and would be adding another 4,000 hotel rooms to an already saturated market,” Wieczynski said. “(Return on investment) would be extremely low for the first couple of years until the Las Vegas market returned to more normalized levels.”

However, Macquarie Securities gaming analyst Joel Simkins said there was still a chance Penn might move on the Fontainebleau, but it would cost at least $1 billion to finish the project.

“While we believe that a Las Vegas asset makes strategic sense for Penn long term, if Penn moves forward, we see it likely working with a partner as well as minimizing the cash outlay and on–balance sheet risk,” Simkins said.

Lawyers for Fontainebleau Las Vegas Holdings LLC have said in papers they filed in federal bankruptcy courtthat they’re talking to a potential buyer they would not identify. The company told the bankruptcy court this week that while they were “encouraged” with the progress of talks, a deal would be complicated because the project’s retail portion is not covered by the bankruptcy proceedings and because it will be hard to find financing to finish the building.

The project’s Chapter 11 bankruptcy case was filed in June 9 in the U.S. Bankruptcy Court in the Southern District of Florida. Fontainebleau Las Vegas and two affiliates filed for Chapter 11 bankruptcy protection from creditors June 9, listing assets and debt of more than $1 billion each.

In April, Fontainebleau filed a $3 billion lawsuit against the lenders, led by Bank of America and JPMorgan Chase, for allegedly violating financing agreements by halting payments for construction of the 63-story Strip resort, which is on 24 acres at the corner of Las Vegas and Riviera boulevards.

Contact reporter Howard Stutz at or 702-477-3871.


The Associated Press contributed to this report.


News Videos
Fiery accident in Las Vegas
A three-car accident on Spring Mountain Road around 6:30 pm on Monday night
A bipartisan coalition holds simultaneous rallies to promote criminal justice
A bipartisan coalition holds simultaneous rallies to promote criminal justice. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Stardust implosion anniversary
Twelve years ago today, the Stardust Resort and Casino was imploded. (Mat Luschek/Review-Journal)
Lawsuits filed against security contractors at Nevada National Security Site
Two lawsuits were filed today against the current and former government security contractors for the Nevada National Security Site, one on behalf of Jennifer Glover who alleges sexual discrimination and assault and the other on behalf of Gus Redding who alleges retaliation after he gave statements supporting Glover’s claims. (Rachel Aston/Las Vegas Review-Journal)
New housing option helps Las Vegas moms keep kids while kicking drugs
WestCare Nevada Women and Children’s Campus in Las Vegas has added a new transitional housing wing for women who have completed the inpatient treatment at the behavioral health nonprofit to help them as they go through outpatient treatment, shore up their finances and prepare to secure long-term housing. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Teenager in critical condition after being struck by an SUV in Henderson
Authorities were called about 2:45 p.m. to the scene in the 2100 block of Olympic Avenue, near Green Valley Parkway and Sunset Road. The teenager was taken to University Medical Center in critical condition. (Michael Quine/Las Vegas Review-Journal)
The Water Question Part 3: Conservation loves a crisis
Future growth in the Las Vegas Valley will rest almost entirely on the community’s ability to conserve its finite share of the Colorado River.
The Water Question Part 7: How much can we grow?
Many experts agree that Southern Nevada can continue to grow, so long as residents are willing to do what needs to be done to stretch our crucial resource as far as it will go.
The Water Question Part 6: How many people can Southern Nevada’s water sustain?
The number can swing wildly depending on a host of variables, including the community’s rates of growth, conservation efforts and the severity of drought on the Colorado River.
Mylar Balloon Demo
NV Energy presented a demonstration Wednesday to depict the damage that can be caused by the release of Mylar balloons.
Educators dressed in red have taken to the streets to demand more for their students.
Educators dressed in red have taken to the streets to demand more for their students. Educators from around the State are bringing the Red for Ed movement to the steps of the Nevada Legislature in Carson City, NV, and to the Grant Sawyer Building in Las Vegas. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Nature Conservancy Ranch
The Nature Conservancy just bought the 900-acre 7J Ranch at the headwaters of the Amargosa River, north of Beatty. The property could become a research station, though ranching will continue.
Swift water rescue at Durango Wash in Las Vegas
On Thursday, February 14, 2019, at approximately 8:42 a.m., the Clark County Fire Department responded to a report of a swift water incident where people were trapped in the Durango wash which is located near 8771 Halcon Ave. Personnel found one person who was trapped in the flood channel. The individual was transported to the hospital in stable condition. Video by Clark County Fire & Rescue.
Flooding at E Cheyenne in N. Las Vegas Blvd.
Quick Weather Around the Strip
Rain hits Las Vegas, but that doesn't stop people from heading out to the Strip. (Mat Luschek/Review-Journal)
Aaron Semas, professional bull rider, talks about his traumatic brain injuries
Aaron Semas, professional bull rider, talks about his traumatic brain injuries. The Cleveland Clinic will begin researching the brains of retired bull riders to understand the impact traumatic brain injuries have on cognition. (Bizuayehu Tesfaye/ Las Vegas Review-Journal) @bizutesfaye
Matt Stutzman shoots arrows with his feet
Matt Stutzman who was born without arms shoots arrows with his feet and hits the bullseye with remarkable accuracy. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Secretary of Air Force Emphasizes the Importance of Nellis AFB
US Secretary of the Air Force Heather Wilson visited Nellis Air Force Base during Red Flag training and described how important the base is to the military.
Former Northwest Academy student speaks out
Tanner Reynolds, 13, with his mother Angela McDonald, speaks out on his experience as a former student of Northwest Academy in Amargosa Valley, which includes abuse by staff member Caleb Michael Hill. Hill, 29, was arrested Jan. 29 by the Nye County Sheriff’s Office on suspicion of child abuse.
Former Northwest Academy students speak out
Tristan Groom, 15, and his brother Jade Gaastra, 23, speak out on their experiences as former students of Northwest Academy in Amargosa Valley, which includes abuse by staff and excessive medication.
Disruption At Metro PD OIS Presser
A man claiming to be part of the press refused to leave a press conference at Metro police headquarters, Wednesday January 30, 2019. Officers were forced to physically remove the man. (Mat Luschek/Review-Journal)
Clients at Las Vegas’ Homeless Courtyard talk about their experience
Clients at Las Vegas’ Homeless Courtyard talk about their experience after the city began operating around the clock. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Las Vegas parts ways with operator of homeless courtyard
Jocelyn Bluitt-Fisher discusses the transition between operators of the homeless courtyard in Las Vegas, Thursday Jan. 24, 2019.(Caroline Brehman/Las Vegas Review-Journal)
Las Vegas police and Raiders partner with SafeNest
Las Vegas police and the Raiders partner with SafeNest on Project Safe 417 (the police code for domestic violence is 417). The program partners trained SafeNest volunteer advocates with Metropolitan Police Department officers dispatched to domestic violence calls, allowing advocates to provide immediate crisis advocacy to victims at the scene of those calls. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
North Las Vegas police chief discusses officer-involved shooting
North Las Vegas police chief Pamela Ojeda held a press conference Thursday, Jan. 24, regarding an officer-involved shooting that took place on Jan. 21. The incident resulted in the killing of suspect Horacio Ruiz-Rodriguez. (Mat Luschek/Las Vegas Review-Journal)
Volunteers gather for annual Clark County homeless count
Volunteers gather for the annual Southern Nevada Homeless Census, Tuesday, Jan. 22, 2019. (Chase Stevens/Las Vegas Review-Journal)
Who can understand hospital price lists?
Lists of costs for procedures, drugs and devices are now posted the websites of hospitals to comply with a new federal rule designed to provide additional consumer transparency. Good luck figuring out what they mean.
People in Mesquite deal with a massive power outage
People in Mesquite respond to a major power outage in the area on Monday, Jan. 21, 2019. (Mat Luschek/Las Vegas Review-Journal)
Group helping stranded motorists during power outage
A group of Good Samaritans are offering free gas to people in need at the Glendale AM/PM, during a massive power outage near Mesquite on Monday, Jan. 21, 2019. (Mat Luschek/Las Vegas Review-Journal)
U.S. Sen. Jacky Rosen falls at Las Vegas parade
U.S. Sen. Jacky Rosen of Nevada fell and injured her wrist at the Martin Luther King Day parade in Las Vegas on Monday, Jan. 21, 2019. (Nathan Asselin/Las Vegas Review-Journal)
Home Front Page Footer Listing