Aladdin beating expectations

David Strow

Tuesday, Oct. 16, 2001 | 9:16 a.m.

The Aladdin hotel-casino is running ahead of financial expectations in the early days of its bankruptcy, attorneys for the Strip resort said Monday.

In a court hearing, Aladdin attorney Gerald Gordon said the Aladdin had borrowed $4.5 million from a $9 million emergency credit line provided by the Aladdin's bankers on Sept. 28, the day the property filed for Chapter 11 bankruptcy. This credit line provides the Aladdin with the cash it needs to stay open.

But Gordon said the Aladdin has been able to pay $1.2 million back to the bankers on this credit line, leaving a debt of $3.3 million. The bankers have said they are willing to extend up to $50 million in credit to the 2,567-room hotel-casino.

Gordon attributed this to stronger-than-expected revenues.

"Operations are exceeding budget as we go forward," Gordon said, without elaborating.

The Aladdin's bankruptcy projections were made following the Sept. 11 terrorist attacks, which led to a severe downturn in business on the Strip. Since that time business remains soft citywide during midweek, but has been strengthening on weekends; Aladdin officials say the hotel has been mirroring that trend.

During Monday's hearing, the Aladdin received court approval on two key motions -- permission to make a payment of nearly $750,000 to several critical vendors, and permission to assume a lease for a spa now under construction at the property.

The vendors included the Aladdin's three liquor suppliers, its limousine service and a provider of specialized pastries. The Aladdin had written checks for $732,000 to these vendors prior to its bankruptcy filing, but a bank did not honor the checks, even though the company says it had enough funds in its accounts. Several vendors responded by suspending services, and the Aladdin warned it could lose the services of more irreplaceable vendors if the payment wasn't made.

The payment of the $732,000 was approved by Judge Robert Jones, clearing the way for these vendors to resume shipments.

The Aladdin also received permission from Jones to assume a lease held by Steiner Leisure Ltd., which is building a $14 million spa at the Aladdin. Gordon called the spa "an additional marketing tool ... which makes (the Aladdin) more competitive in the marketplace."

"This is another element in getting this property moving forward," Gordon said.

Steiner received a lien against the spa, an assurance it had been seeking before it would complete the project. The lien entitles Steiner to profits from the spa even if its lease is terminated by the Aladdin. Steiner had said it could be forced to halt construction on the project if it didn't have this assurance.

With Monday's approval, Steiner attorney David Softness said construction on the spa will continue unabated. It is on track for a November opening.