Second extension granted

Monday, June 18, 2001 | 10:38 a.m.

The Aladdin resort on the Las Vegas Strip has received a second extension on a critical capital infusion from its shareholders.

Under the Aladdin's agreements with its banks, the company's shareholders -- the Sommer Trust and London Clubs International -- must invest $8.7 million into the $1.2 billion resort because it failed to meet certain cash flow requirements in the first quarter. This payment was due May 31, but was extended by the banks until mid-June.

On Friday, sources close to the Aladdin said the deadline for this "keep-well" payment has been extended to July 15. The Aladdin intends to use the additional time to attempt to renegotiate the payment schedule on its debt, sources said.

The Aladdin currently has about $670 million in debt, and its low cash reserves and weak cash flow have many speculating the property could go into bankruptcy. Renegotiating the payment schedule on the debt could help stave off this fate and give the 10-month-old property more time to ramp up operations.

The property faces a $4.9 million debt and interest payment June 29, and a $8.8 million interest payment July 31. It had $9 million in cash May 7 and made a $4.5 million lease payment June 1.

archive