Billionaire Australian casino operator James Packer is in talks to develop a Las Vegas Strip resort on land once occupied by the New Frontier Hotel & Casino, according to people with knowledge of the matter.
Packer bought a piece of a loan backed by the property and is negotiating a potential deal with other creditors including Oaktree Capital Group LLC (OAK:US), said the people, who asked not to be identified because the talks are private. Oaktree purchased the debt at a discount after plans by Israeli businessmen Nochi Dankner and Yitzhak Tshuva to build a Plaza casino resort there stalled, according to the people.
A deal would mark Packer’s return to Las Vegas after losing almost $2 billion during the credit crisis in a series of ill-timed North American casino investments, including Fontainebleau Resorts LLC and Cannery Casino Resorts LLC. Packer is the biggest shareholder in Australia’s Crown Resorts Ltd. (CWN), which jointly owns Melco Crown Entertainment Ltd. (MPEL:US) Melco runs casinos in Macau, China, and Packer could bring a network of Asian gamblers to the proposed venture.
No deal between Packer and Oaktree on the New Frontier site has been completed and talks could still fall through. Packer owns less than 10 percent of the debt, according to one of the people.
Alyssa Linn, a spokeswoman for Oaktree, declined to comment, as did Karl Bitar of Crown.
Dankner’s IDB Development Corp. (IDBD) and Tshuva’s Elad Group paid $1.2 billion to buy the property in 2007 and had the New Frontier hotel demolished that November. They planned to spend $6 billion to $8 billion developing a hotel and casino complex on the 34.5-acre site across the Strip from Wynn Resorts Ltd. (WYNN:US)’s Wynn Las Vegas. The project was abandoned as property values plunged.
Oaktree, the world’s biggest distressed debt investor, now owns more than half of the abandoned project’s loans after buying the debt at a discount of as much as 50 percent, the people said. Credit Suisse Group AG (CSGN) helped arrange a $625 million loan tied to the property, and sold Oaktree at least a portion of the debt, according to the people.
Credit Suisse spokesman Drew Benson declined to comment.
The Clark County Assessor’s Office, which oversees Las Vegas, lists Elad and IDB as the legal owners of the property. IDB spokesman Tal Rabina said the group ceded control of the land two years ago because it couldn’t service the loans. Elad spokesman Idan Wallace in Israel said the group no longer owned the property. Elad’s New York office manager Maya Carasso was unable to verify the ownership of the land, saying the project had been “inactive” for some time and that the matter was “complicated.”
Packer has been considering a return to the U.S. casino market after saying in 2012 that his investments there were his worst to date. He tried earlier this year to buy the Cosmopolitan of Las Vegas hotel and casino, the Australian Financial Review reported in April. Blackstone Group LP (BX:US) agreed to buy the property.
“I should have been better than the mistakes we made in the U.S.,” Packer said at an October 2012 event sponsored by AFR and Deutsche Bank AG in Sydney.
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