Aladdin, club in dispute over Electra show

David Strow

Thursday, Nov. 1, 2001 | 10:39 a.m.

Actress Carmen Electra may one day headline on the Strip. But it appears the Aladdin no longer wants to host her show.

The bankrupt $1.2 billion Strip hotel-casino has filed a request with bankruptcy Judge Robert Jones to reject a lease held by Showclubs of America, the company that had hoped to open a $12 million to $14 million combination nightclub and 1,200-seat showroom at the Aladdin early next year. Electra was to have been the star of the show housed in this showroom.

But officials with the show and nightclub, who say they've already put more than $750,000 into the effort, aren't planning to let the lease go without a fight.

"Showclubs' position is that the lease is effective," said David Tumaroff, executive producer of Electra's "Lumiere" show. "Showclubs has met every requirement of that lease, and Showclubs is going to fight for that lease tooth and nail."

The lease called for Showclubs to secure acceptable financing by early September, and start construction in early October. Neither has happened, the Aladdin said.

Showclubs claimed in earlier filings the Sept. 11 terrorism attacks and the subsequent tourism slowdown were such drastic events that Showclubs had the legal right to begin construction at a later date.

But the Aladdin is rejecting that argument. The financing deadline was days before Sept. 11, according to court documents filed by the Aladdin, and Showclubs provided an "untimely and illusory" financing package, "containing conditions wholly unacceptable" to the Aladdin. The Aladdin also pointed out that Showclubs had provided "not a single iota of evidence" that the aftermath of Sept. 11 had prevented it from getting financing or starting construction.

The Aladdin then asked Jones to approve the lease's rejection, saying it was in the best interest of the hotel-casino and its debtors to do so.

Tumaroff disputed the Aladdin's claims, saying "that financing put in place is as solid as anyone's financing." The first word that Showclubs had that the financing package wasn't sufficient, Tumaroff said, was the Aladdin's request to reject the lease.

But with the delays, will Electra still be a part of the show even if Showclubs prevails? There's been speculation she won't be; Tumaroff said she's undecided.

"Carmen Electra is saying to us, 'What's the deal? Where is the show going to be? When could it open?"' Tumaroff said. "With what the Aladdin is saying (in court documents), what can I say to her?"

Electra and Showclubs may soon receive their answer -- a hearing on the matter is scheduled for Nov. 6.

Also on the agenda for Nov. 6 is final approval of a loan package of up to $50 million to keep the Aladdin afloat through bankruptcy. This loan will be provided by the Aladdin's bankers, who will receive repayment priority over all other creditors.

But the Aladdin will have to convince Jones to grant approval over the objections of the companies providing lease financing for the resort's slot machines, the owner of the Desert Passage mall, and at least six contractors holding liens against the Aladdin.

GE Capital and GMAC, the lease financiers, protested the terms of the loan do not provide them adequate protection, since the banks can declare a default if the Aladdin starts making payments to GE Capital and GMAC. The companies also protested the ability of the banks and the Aladdin to change the loan's terms without consulting with Jones.

Aladdin Bazaar LLC -- the owner of the Desert Passage Mall -- filed an objection asking that funds should be made available from the loan to pay Aladdin Bazaar for the Aladdin's use of its parking garage. The Aladdin is required to make monthly payments of $266,667 to Aladdin Bazaar for the garage's use. The mall's parking garage is the only public parking available for both Desert Passage and the Aladdin. Ironically, the Sommer Trust also owns 57 percent of the Aladdin's common stock.

Six contractors also filed objections. They claimed they are owed millions of dollars for construction work, and protested the banks' move to place a new debt ahead of their liens. The contractors said their liens against the Aladdin were recorded before the banks', and therefore should have payment priority.

Aladdin attorneys have said the resort will be forced to shut down without the loan package. But both the contractors and lease financiers demanded that the Aladdin produce evidence that the banks are the only possible source of a post-bankruptcy loan.

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