BANK OF AMERICA CORPORATION (Reuters) - Bank of America Corp (>> Bank of America Corp) on Wednesday said it reached a $300 million settlement of a lawsuit brought by lenders that helped finance construction of the failed Fontainebleau Resort and Casino in Las Vegas, which filed for bankruptcy protection in June 2009.
The bank, which had arranged a $1.85 billion credit facility, was accused of funneling money into Fontainebleau long after it should have known that financial prospects for the projected $2.9 billion project were worsening.
Lenders said the Charlotte, North Carolina-based bank kept making such disbursements even after it became plain that the global financial crisis was imperiling the project.
Bank of America ultimately stopped funding construction after discovering alleged cost overruns.
Located on the north end of the Las Vegas Strip, the Fontainebleau project was meant to include a 63-story glass skyscraper and feature a casino, a convention center, restaurants and bars, and more than 3,800 guest rooms.
The plaintiff lenders included affiliates of hedge fund firm Avenue Capital Group and private equity firm Carlyle Group LP (>> The Carlyle Group LP), among many others, court records show.
An entity controlled by billionaire investor Carl Icahn bought the unfinished Fontainebleau in February 2010.
A Bank of America spokesman declined to elaborate on the settlement, which was disclosed in the bank's annual report.
The bank said it had set aside enough money for the settlement by the end of 2014.
J. Michael Hennigan, a lawyer for the lenders, said his clients "are pleased to resolve this challenging case."
A stipulation dismissing the lawsuit was filed with the federal court in Las Vegas on Feb. 20.
The case is Avenue CLO Fund Ltd et al v. Bank of America NA et al, U.S. District Court, District of Nevada, No. 09-01047.
(Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)
