Yitzhak Tshuva and Nochi Dankner are seeking to extend the loans for their ambitious Plaza casino and hotel project in Las Vegas a year before the loans are due for repayment. They own the project through Dankner-controlled IDB Holding Corp. Ltd. (TASE:IDBH) units IDB Development Corporation and its subsdiary Property and Building Ltd. (TASE: PTBL) and Tshuva's privately held Elad Properties.
The companies reportedly have no plans to begin construction of the casino anytime soon. Property and Building said, "The company and its partners in the project have begun to review financing alternatives for the project for the coming years, including dealing with the $620 million loan that the consortium obtained from a syndicate of banks and financial institutions, which matures in August 2012. Options under review, but which have not been agreed upon, include an agreement with an international investment bank."
Elad bought the 35-acre site, then occupied by the historic Frontier casino, on the Las Vegas Strip in August 2007 for $1.24 billion and later brought in IDB as a 50% partner. The deal was made on the eve of the sub-prime crisis, which battered the US real estate market nationwide, and which hit Las Vegas especially hard.
Half the land was paid for out of equity and the rest with a LIBOR-linked loan bearing 6.29% annual interest. When the original loan came due in August 2009, the companies obtained a three-year extension at the same terms. The additional interest payments total $95 million.
Property and Building and IDB Development's outstanding shares of the loan total $155 million each, and Elad's share is $310 million.
IBI Investment House analyst Shay Lipman said today, "It cannot be ruled out, and it is even probable, that the banking syndicate that provided the loan to buy the land will have to write off part of the loan, after the partners wrote off 50% of the equity they invested in the project. If the syndicates makes such a write off, it will benefit the partners."
Published by Globes [online], Israel business news - www.globes-online.com - on May 17, 2011
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