Default occurs, but talks continue

Wednesday, Aug. 29, 2001 | 11:15 a.m.

The Aladdin hotel-casino failed to meet a deadline for amending its credit agreements Tuesday, putting the $1.2 billion Las Vegas resort in technical default on more than $700 million in debt.

"The (new credit agreement) did not go into effect (Tuesday), but conversations and negotiations continue," Fred Lewis, spokesman for the Aladdin, said this morning. Parties involved in these talks include the Aladdin, its bankers, and equity owners the Sommer Trust and London Clubs International, Lewis said.

The Aladdin is trying to finalize an agreement that will allow the resort to defer principal payments on its bank debt until next September. That would save the property nearly $18 million over the next year, and greatly reduce the risk of bankruptcy in the near-term. The deadline for finalizing this agreement was Tuesday, and a state of default now exists, as this deadline was not met.

The approval of all creditors needs to be obtained before the agreement goes into effect. It is also believed that a deal announced by LCI several weeks ago -- one that would shift majority control of the Aladdin from Sommer to LCI -- must be finalized as a condition of the new credit agreement.