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Boyd to Build $4B Las Vegas Resort on Stardust Site

By Reuters
Published | Updated

NEW YORK – Boyd Gaming Corp. (BYD) Wednesday unveiled plans to build a $4 billion hotel, retail and casino development on the site of its Stardust Hotel and Casino in Las Vegas.

Shares of the company fell about 3 percent, with one analyst saying investors may have been put off by the cost of the development and Standard & Poor's cut its outlook of Boyd to "stable" from "positive."

S&P also affirmed its ratings on Boyd, including its "BB" corporate credit rating.

The development, to be called Echelon Place and slated to open in early 2010, will include four hotels, with a total of 5,300 guest rooms and suites, Boyd said.

The Stardust will operate on the 63-acre site on the Las Vegas strip through 2006.

Deutsche Bank analyst Marc Falcone said he expected the market to initially think of the project as ambitious. "Investors may be caught a little bit off guard by the price tag," he said.

However, Falcone -- who has a "buy" rating on Boyd shares -- said he expected the project to succeed: "I think the management has expended considerable time planning this property."

Jefferies analyst Lawrence Klatzkin, who also rates Boyd a "buy," said he expected the company to benefit from the project, which showed that the Las Vegas market continues to grow.

"They were always expected to tear down the Stardust and do a mega project," he said.

Boyd plans to take a first-quarter charge of $50 million to $60 million for its planned closing of the Stardust.

The company said Echelon Place would feature the $2.9 billion wholly owned Echelon Resort, which includes one tower with 2,600 rooms, another with 700 suites, a 140,000-square-foot casino and 25 restaurants and bars.

Boyd has deals with partners to build other hotels and entertainment facilities in Echelon Place.

Hong Kong-based Shangri-La Hotels and Resorts has agreed to build one of its namesake hotels in the development, Boyd said.

Boyd said it also reached a deal with the Morgans Hotel Group for the development of two more signature hotels, costing $700 million apiece, within Echelon Place.

Boyd shares were down $1.87, or 3.86 percent, at $46.53 on the New York Stock Exchange.