Aladdin attorney reports progress on its redesign

David Strow

Thursday, July 12, 2001 | 10:28 a.m.

An attorney representing one of the Aladdin's owners outlined the progress of a redesign of the struggling Strip property to the Nevada Gaming Control Board Wednesday, but provided little new light into the property's financial situation.

Four days remain until the property's owners, London Clubs International and the Sommer Trust, will be required by bank covenants to invest another $8.7 million into the property.

London Clubs requested and received board approval Wednesday for a tax-related restructuring of LCI's stock and debt holdings in its Nevada subsidiary. During questioning by board members, LCI attorney Greg Giordano said negotiations are continuing between the Aladdin and its bankers.

The Aladdin is understood to be negotiating with its bankers to lengthen the payment schedule on the $670 million in long-term debt on the Aladdin's books. Under the current payment structure, many analysts have speculated the Aladdin could be headed for bankruptcy and restructuring.

Several British newspapers reported earlier this week that LCI is in talks to convert its $166 million in preferred stock in the Aladdin into common stock, and is waiting to release its annual results until the end of July until a deal can be finalized. LCI currently owns 40 percent of the resort's common stock, but would displace the Sommer Trust as majority shareholder if a deal can be finalized.

Sources have previously told the Las Vegas Sun that LCI would then seek out a buyer for a majority of the stock in the Aladdin, and would try to reduce its stake to 25 percent. Cash from the sale would help shore up LCI's balance sheet, as well as provide cash to help the Aladdin stave off bankruptcy.

Giordano said he was unaware of details of these talks beyond what he had read in news reports. LCI officials and Sommer Trust principal Jack Sommer declined to comment.

In addition, the Aladdin will need cash to pay for a number of significant capital improvements, which Giordano laid out for the board. These improvements are designed to make it easier for customers to get to the Aladdin's casino, in hopes that improved traffic will help the casino's financial results.

Giordano told the board that permits have been secured for a project designed by Las Vegas architect Paul Steelman at the Aladdin's Strip entrances. The Aladdin's northwest entrances will be covered by a metal canopy, which will include more prominent signs directing patrons into the casino. In addition, Giordano said more prominent signs are being placed in Desert Passage mall to direct patrons into the Aladdin casino.

The Aladdin also plans to double the size of its valet parking area, and redesign driveways leading from Las Vegas Boulevard into the valet parking area to make the property easier to access from the Strip, Giordano said.

Other projects planned include a 300-seat cabaret, a spa and a 1,200-seat showroom and nightclub. A news conference formally announcing the showroom and nightclub, which will be operated by Showclubs of America, will be held Friday; the project is set to be completed by the second quarter of 2002, Giordano said. The spa is slightly ahead of schedule and should be completed by December. No completion date was given for the cabaret.