Nochi Dankner and Yitzhak Tshuva are struggling to reach a debt settlement with the banks for their Plaza Las Vegas hotel and casino project, and they are now considering giving up on the project, after rejecting a proposal by some of the lender banks in the syndicate.
Tshuva's Elad Properties owns 50% of the Plaza Las Vegas project company and Dankner's IDB Development Corp. Ltd. and its subsidiary Property and Building Ltd. (TASE: PTBL) own 25% each. Last month, representatives of the companies submitted a proposal to the banks, which are owed $620 million. IDB and Property and Building today notified the TASE, "A response has been received from some of the lenders, including a counter-proposal for material changes with regard to the loan settlement terms proposed by the project's partners. The partners in the project reject the lenders' proposal, and they are considering their options for further negotiations for a loan settlement, if any."
In view of the differences between the parties and because the loan is a non-recourse loan, some sources at the companies believe that they will give up on the Plaza Las Vegas project.
Dankner and Tshuva offered the banks a $250 million payment on the loan, a 50-82% discount on the loan, or rescheduling payments over ten years.
The companies took the $1.24 billion loan to buy the land, then occupied by the New Frontier Hotel, for the Plaza project on the Las Vegas Strip in 2007. But the real estate crisis the following year, put paid to their plans for the Plaza casino, and the debt repayment has been repeatedly postponed. The companies have written off almost the entire $500 million invested in the project.
The bank syndicate includes Bank Hapoalim (TASE: POLI) Mizrahi Tefahot Bank (TASE:MZTF), and Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), which lent $100 million. They have already written off most of the loan.
Last month, IDB Development bond trustees opposed the company's participation in the Plaza Las Vegas loan settlement without their approval. The trustees notified the company that they objected to its NIS 95 million share of the proposed settlement.
Published by Globes [online], Israel business news - www.globes-online.com - on November 4, 2012
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