Date: 4/30/2009 9:14 PM
Associated Press Writer
LAS VEGAS (AP) — Contractors building a $3 billion casino-resort on the Las Vegas Strip began trimming workers this week while financing to finish the project is in question, the developer said Thursday.
Fontainebleau Las Vegas sued 11 lenders last week, saying the banks had pulled back on a promised $800 million in funding without merit. The lawsuit said the banks told Fontainebleau that it had defaulted on the agreements when it had not.
Dave Satterfield, a spokesman for Fontainebleau Las Vegas, said Thursday that about 3,000 workers on site were being reduced to skeleton crews, with construction continuing. Fontainebleau’s contractors had anticipated hiring another 1,700 workers to finish the project in time for an anticipated October opening.
The hotel is about 70 percent done.
“It’s basically to be expected, given that the banks reneged on the agreement to provide the revolving credit facility,” Satterfield told The Associated Press on Thursday. “The subcontractors are understandably nervous about getting paid moving forward.”
Some union officials and lawmakers have sided with Fontainebleau in calling on the banks to lend the $800 million.
Mark Ayers, president of the Building and Construction Trades Department of the AFL-CIO, called the banks’ decisions “unfortunate and disdainful” in a Wednesday statement.
“These are critical jobs that are now in jeopardy of vanishing at the worst possible moment,” Ayers said. “Thousands of taxpaying union workers have made a commitment to completing this project. It’s time these banks made the same commitment and worked with Fontainebleau Las Vegas to restore the company’s funding.”
Fontainebleau is in discussions with Bank of America about restructured financing for the money. Bank of America and Merrill Lynch Capital Corp. each promised $100 million to Fontainebleau, according to the lawsuit. Bank of America purchased Merrill Lynch in September.
Satterfield said Bank of America also is the administering agent for the loan.
Also named in the lawsuit are Deutsche Bank, Barclays Bank PLC, Royal Bank of Scotland PLC, Sumitomo Mitsui Banking Corporation New York, Bank of Scotland, HSH Nordbank AG, Camulos Master Fund LP and MB Financial Bank, N.A.
Fontainebleau has already borrowed more than $2 billion. The company has said neither the lawsuit nor the $800 million loan affects its Fontainebleau Miami Beach property.
Copyright 2009 The Associated Press.
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