|By Douglas Hanks, The Miami
HeraldMcClatchy-Tribune Regional News
Jan. 28, 2010--Legendary financier Carl Icahn won court permission Wednesday to buy the bankrupt Fontainebleau Las Vegas construction project for $150 million, a mammoth discount on the $2 billion already spent on the unfinished casino tower.
The price amounts to about 8 cents for every dollar Aventura developer Jeffrey Soffer and his investors put into the project. The 63-story tower on the north end of the famous Vegas Strip was once destined as the launching pad for a global chain of casinos bearing the Fontainebleau name.
Soffer bought the Fontainebleau Miami Beach in 2005, and soon announced plans to build a second Fontainebleau on the Vegas Strip.
The Miami Beach resort, a separate corporate entity, was not involved in the Vegas bankruptcy. But Soffer's legal team is girding for creditors from Vegas to pursue the Miami Beach hotel as an asset tied to the Vegas debts.
Soffer did not attend Wednesday's hearing in federal bankruptcy court in Miami, but in an interview he stood behind his Vegas venture.
"It's a great project. Long-term, it's going to be great," Soffer said. "Hopefully, it will get finished."
The project filed for bankruptcy in June after banks cut off construction funding, citing overruns and other alleged problems. Soffer blamed the Vegas project's woes on the collapse of its main lender, Lehman Brothers, and other problems tied to the global banking crisis.
"When the world turns on you, it's hard," Soffer said. "Some things are out of your control. That's the way life is."
Wednesday's hearing was a formality, with Icahn the only buyer with both the means and the desire to acquire the Fontainebleau Vegas. The project is about 70 percent finished, and some estimates predict it will cost another $1 billion to finish the tower.
A bankruptcy auction for the unfinished project was canceled after no bidders qualified to compete with Icahn, despite nearly 200 potential buyers being contacted by the Fontainebleau Vegas team.
"We're obviously disappointed an auction became unnecessary," said Scott Baena, a lawyer with Miami's Bilzin Sumberg representing the Fontainebleau Vegas. "The sales process demonstrated the project continues to engender costs and risks that made it unattractive."
Cristol joked about the lack of suitors for the 63-story casino hotel in Vegas, asking if anyone in the standing-room-only audience had an extra billion dollars to make a last-minute offer.
"Any other bidders out there?" he asked to the courtroom of lawyers. "Going once, going twice, going three times." He banged his gavel then declared "Sold to Icahn!"
Icahn, a legendary corporate raider known for scooping up distressed assets, did not attend the hearing.
The billionaire investor has been moving feverishly on casino properties recently, with Nevada gambling regulators last week approving his plan to control nine casinos in four states as part of the bankruptcy reorganization of Tropicana Entertainment LLC.
In December he revealed in federal court papers in New Jersey that he planned to pump more cash into his bid to buy Donald Trump's bankrupt casinos. Icahn already had agreed to buy a majority of the $486 million bank debt on the three properties: Trump Plaza Hotel and Casino, Trump Taj Mahal Casino Resort and Trump Marina Hotel Casino.
Howard Karawan, the senior Fontainebleau executive serving as chief restructuring officer in Vegas, said the global recession felled the Sin City venture.
"Had the global economy withstood, I don't think we'd be here," he said.
No creditors objected to the Icahn sale, though contractors and lenders continue to press court fights against each other and the Soffer entities that backed the project.
Contractors claim more than $600 million in unpaid bills, and lenders are out more than $1 billion.
Of Icahn's purchase fee, roughly $45 million was used to fund the bankrupt project in its remaining months -- money that mostly went to lawyers' fees.
Bob Charbonneau, a Miami lawyer representing Vegas contractors, stood near the front of the emptying courtroom after the hearing.
"We end up with $105 million to distribute," he said, "and a lot of blood on the floor."
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