Casino operator Boyd Gaming has delayed construction on its $4.8bn Echelon hotel and casino project on the Las Vegas strip for up to a year.
Boyd Gaming chief executive Keith Smith blamed the weakening credit markets for the unprecedented decision to shelve a project of this size.
The decision was made as board members decided to halt falling share prices and protect and reinforce the shareholder value of the core capital.
The Echelon project encompasses 5,000 hotel rooms and suites, including three boutique hotels, a 140,000ft² casino, 300,000ft² of retail, 750,000ft² of meeting space, 30 restaurants and two theatres.
Smith confirmed during a conference call with analysts that the decision was only to delay and that the company remained fully committed to the project.
“It was a decision based on the economic climate for capital. The financing is just not there. This is not a change in strategy for the company,” Smith said.
The company plans on resuming construction once the credit markets turn around.
The downturn in the credit markets is expected to continue through 2008 and into 2009.
Boyd Gaming began construction at the 87-acre site in June 2007 and had already spent $500m by the time of the announcement.
Boyd Gaming has financed $3.3bn worth of the Echelon budget. The rest of the finance was to be provided by the company’s two joint venture partners, mall developer General Growth Properties and Morgan’s Hotel Group, which was responsible for the development of two boutique hotels.
Both companies have made it clear that the current credit market made it virtually impossible for them to obtain financing for their portion of the development.
The decision to halt construction met with applause on Wall Street as Echelon shares went up by $2.03 or 20.34%. Boyd stock had previously fallen from a high of $45.73 in July 2007 to a low of $7.90 in July 2008.
By Daniel Garrun