Dankner and Tshuva get two-month reprieve on Las Vegas project
The land was acquired for $1.24 billion in 2007, before the global crisis.
Companies in groups led by Nochi Dankner and Yitzhak Tshuva have gained more time from lenders to renegotiate the debt on the Las Vegas Plaza, their stalled casino and hotel project in Nevada's gambling capital. The firms were given a reprieve at the last moment over the weekend.
The IDB's Property and Building and IDB Development Corp. along with Tshuva's Elad Group received a two-month extension to reach a comprehensive arrangement over the project's debt. Financing of $620 million was provided by a consortium of more than a dozen lenders as part of the $1.24 billion purchase price for the land, which was acquired in 2007.
The syndicate was led by Credit Suisse, in which IDB group company Koor Industries holds a 2.3% stake. Three major Israeli financial firms are part of the consortium: the Harel financial and insurance group, Bank Hapoalim and Bank Mizrahi-Tefahot.
The project was developed before the global economic crisis of 2008. Construction was later put on hold until the economic environment improved.
Although the estimated value of the land is now substantially below the principal of the loan, the members of the consortium agreed to give Dankner and Tshuva's firms more time. This is because during the two-month period, they will be getting full interest payments on the original principal balance, rather than a reduced sum based on the property's current market value.
The loan at issue is a nonrecourse loan, meaning that the sole security is the land itself. If after the two months the parties don't come to an agreement with the consortium, they could forfeit the property.
It is thought that if the two Israeli groups iron out a debt arrangement with the syndicate, they will probably have to inject additional tens of millions of dollars into the deal.