Morgans Hotel Group has greatly reduced its capital commitment to Boyd Gaming’s Echelon resort project on the Las Vegas Strip.
An amended agreement between Morgans and Boyd calls for the immediate return of a $30 million deposit to Morgans. Also, Morgans’ future funding obligation of $41 million was eliminated, as was Morgans’ obligation to provide a construction loan guaranty.
In addition, Morgans gained sole control over the use of the Delano and Mondrian hotel brands in connection with the project. The terms of the management agreement, which call for Morgans to manage a Delano and a Mondrian hotel at Echelon, haven’t changed.
Boyd Gaming halted construction on the Echelon project in the beginning of August because a credit crunch in the financial markets prevented Boyd from securing financing for portions of the development. Boyd said it could resume construction in nine months to a year if the credit situation improved.
The $4.8 billion, 5000-room Echelon project calls for the construction of the anchor Echelon Resort and Casino (to be operated by Boyd), plus Mondrian, Delano and Shangri-La hotels. Before Boyd ceased construction, Echelon was scheduled to be completed in the third quarter of 2010.
The deadline to obtain construction financing has been extended to Dec. 31, 2009; Morgans and Boyd each have the right to terminate their joint venture for any reason prior to that date.