Aladdin default cured

Friday, April 30, 1999 | 10:22 a.m.

Aladdin Gaming said its bank lenders approved changes in financing agreements to cure defaults that threatened to delay completion of the $827 million resort.

In addition, the project's outside accountants have issued a new, unqualified opinion on Aladdin Gaming's latest financial report, removing their previous qualified opinion that constituted a condition of defaul.

The disclosures were made in a new report Aladdin filed with the Securities & Exchange Commission.

The report said Aladdin's controlling shareholder, The Sommer Trust, and its partner, London Clubs International, agreed to infuse up to $58 million of additional cash into the project to finance construction changes and maintain a minimum net worth of $100 million for Aladdin Gaming.

The Sommer Trust is an affiliate of billionaire developer Jack Sommer.

The builder of the Las Vegas Strip hotel-casino-entertainment complex said financial projections indicated Aladdin's net worth might have fallen below that $100 million threshold later this fall.

The shortfall was expected to grow each month, topping out at $33 million before the resort opens. But the trust and London Clubs agreed to fund any imbalance that might occur.

The SEC filing also said the partners have funded $25 million of added construction and pre-opening costs, curing another element of the default.

The filing said construction on the project hasn't been delayed and the resort is still scheduled to open next year.

Phase 1 of the Aladdin project consists of an "Arabian Nights" theme incorporated into a 2,600-room hotel and 116,000-square-foot casino being built on 35 acres along the Strip.

The project includes a 1,400-seat showroom, six restaurants, a separate 15,000-square-foot London Clubs casino aimed at premium international gamblers, the 7,000-seat Aladdin Center for the Performing Arts and other amenities.

It will also feature "Desert Passage," a 496,000-square-foot retail shopping area operated by TrizecHahn Centers Inc.

Phase 2, the Aladdin Music Project, is expected to include a 1,000-room hotel, a 50,000-square-foot casino, three restaurants, a 1,500-person nightclub and other facilities.

The company expects Phase 2 to be open within 24 months after it finds a joint venture partner and completes financing for that project. Planet Hollywood pulled out of the music project after encountering financial difficulties last year.