Plaza Las Vegas Venture Gone Kaput?

Talks on a debt settlement on the planned Plaza Las Vegas casino and hotel project of Israeli tycoons Nochi Dankner and Yitzhak Tshuva appear to have failed, and the project is likely to be scrapped. The Plaza Las Vegas venture owes a bank syndicate $620 million which was used to purchase the land for the project.

The syndicate this October issued a warning letter to the Dankner and Tshuva over the non-payment of the loan on time. A meeting was subsequently held in New York where the borrowers presented a debt settlement proposal. The banks were offered a $250 million loan payment, with the proviso of a 50-82% loan discount or rescheduling payments over ten years. The lenders, however, balked at these terms and presented an undisclosed counterproposal on the terms of the loan settlement.

The counterproposal, however, were rejected by the Plaza partners who are now considering if there are any options left for further negotiations on the loan settlement. Notably, the bondholders of Dankner’s IDB Development Corp. Ltd., which owns 25 percent of the Plaza Las Vegas project, were at the outset in opposition to the company’s participation in the loan settlement. In particular, the IBD Development bond trustees oppose the $95 million share of the company in the botched proposal for debt settlement.

Because of the differences between the Plaza partners and the bank syndicate, plus the fact that the loan is a non-recourse loan, knowledgeable sources say that the partners will give up on the Plaza Las Vegas project. A $1.24-billion loan was actually secured for the project’s land purchase in 2007. The real estate crisis in the following year adversely affected the Plaza project, and there were repeated postponements of debt repayment. Almost the entire $500 million that the partners have invested in the project have already been written off.

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