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Sep. 26, 2008
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Boyd redoes hotel deal

Accord amended for Echelon project

By ARNOLD M. KNIGHTLY
REVIEW-JOURNAL

Boyd Gaming Corp. and New York-based Morgans Hotel Group have reworked an agreement to develop two boutique hotels on the stalled Echelon project on the Strip.

Both sides said they remain committed to opening Delano and Mondrian hotels as part of the $4.8 billion development, whenever that opening may be.

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    • "(The amended agreement) preserves the original intent of Echelon as a development with five hotels, two of them Delano and Mondrian," Boyd Gaming spokesman Rob Stillwell said, adding that the gaming company has no plans to seek another partner to replace Morgans.

    Both companies said Thursday the deadline for Morgans to obtain construction financing for the hotels has been extended through 2009.

    The agreement could be terminated by either company at any time before Dec. 31, 2009.

    Boyd will return a $30 million deposit, plus interest. The new agreement also frees about $41 million in future funding obligations for Morgans.

    Morgans is also no longer obligated to provide a construction loan guarantee and will have sole control over the use of the Delano and Mondrian brands in relation to the development.

    "The financial markets simply would not support the capitalization of what we envisioned for that venture," Stillwell said.

    In January 2006, the companies announced a 50-50 joint-venture partnership to develop the two boutique hotels at Echelon.

    Then the credit markets tightened, making it difficult for both parties to obtain financing at cost-effective rates.

    Boyd announced Aug. 1 it was delaying construction on Echelon for up to a year, raising speculation about the future of Morgans' involvement in the project.

    Construction on the hotels, estimated to cost $1 billion, was to have begun this summer.

    Both companies are seeking to decrease their equity stake in the joint venture, which could include bringing in a third party to help pay for the boutique hotels.

    "We believe the amended agreement provides substantial flexibility and represents a reasonable framework for (Morgans) to move forward ... on the basis of a vastly reduced capital commitment," Morgans Chief Executive Officer and President Fred Kleisner said in a statement.

    Morgans followed a similar ownership model at the Hard Rock Hotel, which it bought in partnership with private-equity investor DLJ Merchant Bank for $770 million.

    However, Morgans' stake in the property has diminished from 33 percent in February 2007, when the deal closed, to 20 percent as Morgans has decreased its equity contributions in the $760 million expansion, which is fully financed.

    The amended Echelon deal restricts the amount the companies must put toward predevelopment and related costs to about $420,000 each.

    Boyd is also in discussions to amend its deal with mall developer General Growth Properties Inc., Stillwell said.

    General Growth was slated to develop the $500 million, 300,000-square-foot retail center for Echelon.

    JP Morgan gaming analyst Joseph Greff said earlier this month that Boyd Gaming management suggested Echelon's delay "is likely to be extended" beyond the year time frame.

    "While management is still committed to the project and still believes it is the right decision long term for the company, we see no way the project is started again prior to 2010," Greff wrote in an investors report.

    Stillwell said the size of the development -- 5,000 hotel rooms and suites, including three boutique hotels, a 140,000-square-foot casino, 750,000 square feet of meeting space, 30 restaurants and two theaters and retail on 87 acres -- won't change.

    "That is what we hope to preserve over the course of the delay," Stillwell said. "We went about this in a very methodical, careful manner with the idea that it is a delay. We want the project to delay in an orderly fashion so when the delay is over, we can resume progress."

    Boyd Gaming shares rose 0.61 percent, or 6 cents, Thursday to close at $9.84 on the New York Stock Exchange.

    Morgans Hotel Group's stock slid 32 cents, or 2.53 percent, to close at $12.33 on the Nasdaq National Market.

    Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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    video wrote on October 01, 2008 07:31 AM: Thanks for the video tip.

    http://www.guardian.co.uk/world/2008/sep/25/sarahpalin.republicans


    karl wrote on September 27, 2008 07:36 AM: Hey people check out the video of Sarah Palin and her preacher who cast out witchcraft demons.

    Scary, creepy stuff for someone that could be a 72 year-old heartbeat away from the presidency.


    Stock swindle wrote on September 26, 2008 03:27 PM: Dear Jen from Boyd Gaming,

    Let me try to explain the difference between a bad decision and what happened at the Orleans on that day.

    A bad decision would be something like doing a U-turn and getting caught in the middle of it by Metro.

    Another example of a bad decision might be buying a home in Las Vegas 2 years ago, thinking your were going to make BIG money for your retirement.

    What we have here, in this case, is a Supervisor making DEADLY ERRORS that cost 2 men their lives. ERRORS that had been made previously by the same Supervisor. This wasn't the first time Boyd Gaming had been caught doing this.

    Where were the respirators? MANDATORY.
    Where were their harnesses? MANDATORY.
    Where was their training? MANDATORY.

    Boyd Gaming WILLFULLY SENT THESE 2 MEN TO THEIR DEATHS. A BAD DECISION?

    To add insult to their DEATHS, and David Snow's LIFE THREATENING INJURIES,
    Boyd Gaming Officials contact Governor Gibbons and arranges to have Offical OSHA findings, as well as Boyds Gamings own Safety Engineers findings
    REDUCED from WILLFUL to SERIOUS violation so the families of these 2 DEAD MEN can't hold Boyd Gaming responsible for these gentlemen.

    Is that how Boyd Gaming mourns these 2 victims of their WILLFUL NEGLIGENCE?

    They died in a manhole full of sewage.
    Now you pile it on their corpses? BOYCOTT BOYD GAMING.

    Willful misconduct means that they knew that these guys would die if they went into that manhole with out SAFETY IN PLACE. THEY KNEW!

    SHAME ON YOU JEN FOR DEFENDING THIS BLATANT ACT OF NEGLIGENCE THAT CAUSED THE DEATH OF THESE 2 MEN. WILLFULLY.

    Please read the L.A Times article before you feel sorry for anyone at Boyd Gaming and their crocodile tears.

    And Jen, I hope someday you feel an ounce of their pain while drowning in RAW SEWAGE. PEACE THIS!



    ex gambler wrote on September 26, 2008 03:12 PM: Yeah, and can you belIEve Stations is opening Aliante in a little over 1 month? SUCKERS!


    T. Ryan Outlaw wrote on September 26, 2008 01:45 PM: Boyd is getting exactly what it deserves. Their sleazy and manipulative tactics focusing on nothing but the bottom line is a perfect example of corporate greed which is responsible for putting America in the position it's in.

    They had a classic gem in the Stardust and this is what it's turned into.

    BTW, There's NO WAY anything gets started in 2009.....That's blatently obvious!


    Jen wrote on September 26, 2008 11:03 AM: There is no one at Boyd Gaming who doesn't mourn for those men.... They are a good company who had an employee who made a bad decision. That employee was a good person also - who made a decision he will have to carry for the rest of his life. No one had intended the horrible consequences of that day.

    I'm sorry you feel that way Stock - I hope you find peace someday.


    Stock Swindle wrote on September 26, 2008 10:43 AM: I wonder if the Boyd Family made any money off of this delay tactic?



    Boyd Gaming stock jumped substantially the day that they announced it was shutting down the Echelon. There was praise worldwide from economists at their prudent decision making in these tough economic times.



    Now that they've established how easy it is to start a chain reaction of economic panic, that has devestated our local economy, they decide it's time to pretend they care again.



    They probably made just enough to hire 3 more maintenence men to replace the ones that they WILLFULLY KILLED in their greae trap a couple of years ago.



    BOYCOTT BOYD GAMING FOREVER!!!!



    REST IN PEACE TRAVIS AND RICHARD.

    HANG IN THERE DAVID SNOW.



    Are prayers are with you all.



    Go to L.A Times and look up Orleans Las Vegas OSHA for the REAL TRUTH.



    SHAME ON YOU BOYD GAMING for killing those men. SHAME ON YOU NEVADA OSHA!!

    D. Roger Bremmner and Gibbons will rot in HELL for what he did these poor families. F.B.I. is after this one.


    Stock Swindle wrote on September 26, 2008 10:43 AM: I wonder if the Boyd Family made any money off of this delay tactic?

    Boyd Gaming stock jumped substantially the day that they announced it was shutting down the Echelon. There was praise worldwide from economists at their prudent decision making in these tough economic times.

    Now that they've established how easy it is to start a chain reaction of economic panic, that has devestated our local economy, they decide it's time to pretend they care again.

    They probably made just enough to hire 3 more maintenence men to replace the ones that they WILLFULLY KILLED in their greae trap a couple of years ago.

    BOYCOTT BOYD GAMING FOREVER!!!!

    REST IN PEACE TRAVIS AND RICHARD.
    HANG IN THERE DAVID SNOW.

    Are prayers are with you all.

    Go to L.A Times and look up Orleans Las Vegas OSHA for the REAL TRUTH.

    SHAME ON YOU BOYD GAMING for killing those men. SHAME ON YOU NEVADA OSHA!!
    D. Roger Bremmner and Gibbons will rot in HELL for what he did these poor families. F.B.I. is after this one.


    bob wrote on September 26, 2008 10:36 AM: Just another property that will never old....remember Vegas World?


    Dave wrote on September 26, 2008 10:11 AM: I am waiting for City Center to open its doors to the flock that will bring las Vegas Blvd to a standstill. Oh wait, Las Vegas Blvd traffic is already at a standstill. Hmmm.... how would you like to take a taxi from Mandalay Bay to the Venetian and sit in a taxi for 60 minutes to travel 3 miles? Get your walking shoes, it may be the fastest mode of transportation on the Strip.


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