Monday, April 8, 2002 | 11:13 a.m.
The majority owner of a heating and cooling plant at the Aladdin resort on the Las Vegas Strip has filed for bankruptcy, a move it says is necessary to prevent possible foreclosure.
ETT Nevada Inc., which filed for Chapter 11 bankruptcy protection, owns 75 percent of Northwind Aladdin LLC, which owns and operates an on-site plant that provides the Aladdin with hot and cold water, as well as backup electricity service. ETT Nevada is a subsidiary of Chicago-based energy giant Exelon Corp.; its partner is a subsidiary of Sierra Pacific Resources, the parent company of Nevada Power.
To build the $40 million plant, Northwind obtained $23 million in financing, and secured this investment with ETT's equity in Northwind. When the Aladdin declared bankruptcy last September, this financing went into default. Most of the financing was provided by affiliates of John Hancock Financial Services Inc. of Boston.
"This filing was necessary to protect ETT Nevada's $9.3 million equity investment in Northwind Aladdin from the risk of loss due to a possible lender foreclosure and to avoid disruption to Northwind Aladdin's business and operations," Exelon said in a Friday statement.
Northwind Aladdin will continue to provide water and energy services to the Aladdin, Exelon said, and an Aladdin official said the bankruptcy "will not affect us at all."
Northwind and the Aladdin are currently tangled in a dispute in bankruptcy court. In an early March filing, Northwind claimed the Aladdin had failed to make payments totaling $3.05 million since the bankruptcy filing. These payments included return on equity payments, payments to service Northwind's debt and operational charges, Northwind said. Northwind has demanded payment of these claims in a lawsuit filed in U.S. Bankruptcy Court.
Northwind's claim for damages came after the Aladdin asked for a ruling to determine how much it owes Northwind under a service agreement, and the priority of Northwind's claim relative to other creditors.
In a hearing last week, bankruptcy Judge Robert Jones ordered both sides to come to a settlement as quickly as possible. A source familiar with the case said both sides are now close to settlement.