Schaeffer, a former Mandalay Bay executive, co-founded Fontainebleau Resorts in May 2005 with developer Jeffrey Soffer, the Miami-based majority owner of the company and a principal with condominium developer Turnberry Associates, which owns an adjacent multi-tower residential development. Schaeffer, Fontainebleau Resort's chief executive officer, president and a member of its board of managers, was charged with overseeing development of Fontainebleau Las Vegas.

Fontainebleau Resort spokesman Dave Satterfield says the company continues to explore its financing alternatives for completing the project despite Schaeffer exit. The company did not say whether it planned to replace Schaeffer in the immediate future.

Bill Lerner, a principal analyst with Union Gaming Group, told the Las Vegas Review Journal that Schaeffer's exit could be another ominous sign for the project's future. "Glenn is a talented guy and Fontainebleau (Las Vegas), his concept, is a beautiful project," Lerner said. "If his departure is a precursor to them stopping the project, it would be a function of timing and difficult capital markets."

Fontainebleau is a 24-acre, 3,800-room resort heretofore on track to open this fall across from Circus Circus, which used to be part of Mandalay Resort Group. Schaeffer, as Mandalay's president and board member, was instrumental in the sale of that company to MGM Mirage before hooking up with Soffer to run Fontainebleau.

Fontainebleau is approximately 70% complete. Until recently, there were 3,300 workers on the Fontainebleau site trying to meet the original fall 2009 completion date. There are currently a few hundred workers on site as the remaining executives continue to seek the financing necessary to complete the project.

In late April , Fontainebleau Las Vegas LLC filed a $3-billion lawsuit against 11 lenders in Clark County District Court, alleging they have went back on contractual commitments to provide nearly $800 million in revolver financing needed to complete the resort. The developers and term lenders have already have invested more than $2 billion of debt and equity in the 63-story project.

The revolver lenders notified Fontainebleau developers on April 20 that they had "terminated" their agreement to provide the revolver loan due to one or more "events of default" that were not specified, according to the complaint filed on April 23. The developers say they haven't defaulted on any part of the agreement.

Earlier this month , Fontainebleau supplemented their lawsuit, claiming Deutsche Bank AG, one of the revolver lenders, has "sought to persuade other Revolver Banks to breach their commitments and has worked aggressively to discourage" a solution in order to minimize competition with Cosmopolitan, another resort project under construction on the Strip that Deutsche Bank took control of last year after the developer defaulted.

"In so doing, Deutsche Bank has breached the covenant of good faith and fair dealing that is implied by law in every contract that, like the loan agreement here, is governed by New York law," states the amended complaint.

Deutsche Bank had committed to providing 10% of the $800 million in revolver financing for Fontainebleau. The German bank has said the allegations are "meritless" and meant only to "distract" from the fact that the loan covenants have been breached.

A Fontainebleau spokesperson told GlobeSt.com in late April that the developer has $130 million in the bank, which would have only lasted a few months with 3,300 workers on site.

"We are not asking for anything special, merely that the revolver banks fulfill the commitment they made to fund this project," Fontainebleau Resorts LLC executive chairman Jeff Soffer said in April.

Fontainebleau's local attorney Steve Morris wrote in the complaint that the previously committed financing cannot be replaced in today's economic environment and that without it the project will never be finished.

"Construction will cease, contractor liens will accrue and revenues from the project will never be realized," he wrote.

The lenders named in the lawsuit are Bank of America, JPMorgan Chase, Merrill Lynch Capital Corp., Barclays Bank PLC, Deutsche Bank Trust Company Americas, Royal Bank of Scotland PLC, Sumitomo Mitsui Banking Corporation New York, Bank of Scotland, HSH Nordbank AG, Camulos Master Fund LP and MB Financial Bank NA. The list does not include one revolver lender with a $10 million commitment that is in FDIC receivership and is therefore not part of the suit.

The project financing includes two term loans and the revolver loan. Fontainebleau Las Vegas is represented by Morris Peterson of Las Vegas and Kasowitz, Benson, Torres & Friedman LLP of New York. The complaint states that the term lenders have met their obligations. The terms of the loans have not been made public.

Fontainebleau Las Vegas is expected to include nearly 300,000 square feet of retail, a 353,000 square foot convention center, a 60,000-square-foot spa, a 3,200-seat performing arts theater and a large rooftop pool and club scene.

Instant Insights /

Fontainebleau CEO Leaves Amid Financing Woes

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