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Billionaire Packer Seeking Vegas Return in Oaktree Talks

James Packer
Billionaire Australian casino operator James Packer. Photographer: Julian Abram Wainwright/Bloomberg

Australian billionaire James Packer is plotting his return to Las Vegas after losing almost $2 billion during the 2008 credit crisis from ill-timed North America casino investments.

Packer, chairman of Australia’s Crown Resorts Ltd., is in talks to develop a Las Vegas Strip resort on land once occupied by the New Frontier Hotel & Casino after buying a piece of a loan backed by the property, according to people with knowledge of the matter. He is negotiating a potential deal with other creditors including Oaktree Capital Group LLC, said the people, who asked not to be identified because the talks are private.

A deal would mark Packer’s return to Las Vegas after losing money on investments including Fontainebleau Resorts LLC and Cannery Casino Resorts LLC. It would also breathe new life into the 34.5-acre site of the former New Frontier after plans by Israeli businessmen Nochi Dankner and Yitzhak Tshuva to build a casino resort there stalled.

“Crown is a great brand and if it’s going to be a major international player in gaming then it really does need to be in Las Vegas in some way, shape or form,” said Matt Williams, who manages A$22 billion ($20.5 billion) as head of equities at Perpetual Ltd, which owns 5 percent of Crown. The company has enough development experience to make a Las Vegas project work, Williams said by phone today from Sydney.

Packer is the biggest shareholder in Crown, which jointly owns Melco Crown Entertainment Ltd. Melco runs casinos in Macau, China, and Packer could bring a network of Asian gamblers to the proposed venture.

Abandoned Project

No deal between Packer and Oaktree on the New Frontier site has been completed and talks could still fall through. Packer owns less than 10 percent of the debt, according to one of the people.

Alyssa Linn, a spokeswoman for Oaktree, declined to comment, as did Karl Bitar of Crown.

Shares in Crown fell 1.6 percent to A$16.01 at 10:20 a.m. in Sydney, headed for their sharpest fall in three weeks and outstripping the 1.2 percent decline in the S&P/ASX 200 index.

Dankner’s IDB Development Corp. and Tshuva’s Elad Group paid $1.2 billion to buy the property in 2007 from Phil Ruffin and had the New Frontier hotel demolished that November. They planned to spend $6 billion to $8 billion developing a hotel and casino complex on the site across the Strip from Wynn Resorts Ltd.’s Wynn Las Vegas. The project was abandoned as property values plunged.

Oaktree’s Investment

Oaktree, the world’s biggest distressed debt investor, now owns more than half of the abandoned project’s loan after buying the debt at a discount of as much as 50 percent, the people said. Credit Suisse Group AG helped arrange a $625 million loan tied to the property, and sold Oaktree at least a portion of the debt, according to the people.

Credit Suisse spokesman Drew Benson declined to comment.

The Clark County Assessor’s Office, which oversees Las Vegas, lists Elad and IDB as the legal owners of the property. IDB spokesman Tal Rabina said the group ceded control of the land two years ago because it couldn’t service the loans.

Elad spokesman Idan Wallace in Israel said the group no longer owned the property. Elad’s New York office manager Maya Carasso was unable to verify the ownership of the land, saying the project had been “inactive” for some time and that the matter was “complicated.” She said in an e-mail yesterday that Elad didn’t want to comment further about the project.

‘Mistakes’ Made

Packer is the world’s 208th richest person with a net worth of $6.7 billion, according to the Bloomberg Billionaires Index. He has been considering a return to the U.S. casino market after saying in 2012 that his investments there were his worst to date. They preceded the 2008 credit crisis that led to a slump in property values, room rates and gambling revenues in Las Vegas.

“I should have been better than the mistakes we made in the U.S.,” Packer said at an October 2012 event sponsored by AFR and Deutsche Bank AG in Sydney.

The city’s economy has been recovering. The unemployment rate for the area dropped to the lowest since 2008 in April, according to the Bureau of Labor Statistics. Tourism is also up, with 20.7 million visitors this year through June 30, a 4.2 percent increase over the first half of 2013, according to the Las Vegas Convention and Visitors Authority.

Packer, who is also developing casinos in Sydney and Sri Lanka, tried earlier this year to buy the Cosmopolitan of Las Vegas hotel and casino, the Australian Financial Review reported in April. Blackstone Group LP agreed to buy the property.

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