Marriott, Pinnacle look at bankrupt Aladdin

Friday, Sept. 27, 2002 | 11:07 a.m.

Marriott International Inc., the hotel giant that has scores of hotel rooms in Las Vegas under various corporate and franchise brands, is negotiating to be part of a three-way partnership that is attempting to buy the $1.2 billion Aladdin hotel-casino out of bankruptcy, a Wall Street financier familiar with the deal said Thursday.

The company, whose JW Marriott luxury brand earlier this year took over management of the 461-room former Resort at Summerlin, would team with Glendale, Calif.-based Pinnacle Entertainment Inc., and Colony Capital LLC, a Los Angeles-based equity firm that has long sought the 2,567-room Strip property.

Colony Capital was identified by sources earlier this week as the lead "stalking horse" bidder that would offer to buy the Aladdin and would be paid a breakup fee if another offer is accepted.

Under the proposal -- which is still in negotiation -- Marriott would manage the hotel. The company has 13 lodging brands, including Ritz-Carlton, Renaissance Hotels, Fairfield Inn and Courtyard. A spokeswoman at the company's Bethesda, Md., headquarters said the company has nine properties in the Las Vegas area with a total of 1,463 rooms. The company also is building a Ritz-Carlton property at Lake Las Vegas in Henderson.

Worldwide, the company has more than 2,000 properties, including hotels, timeshare units and senior living communities.

Pinnacle, formerly known as Hollywood Park and the owner of seven casinos in four U.S. states and Argentina, would manage the casino. Pinnacle already has a gaming license in Nevada with the Boomtown Reno hotel-casino in Verdi among its holdings.

The source said that besides refinancing hundreds of millions of dollars owed creditors, Pinnacle and Colony Capital would each invest $35 million in the Aladdin and Marriott would invest $20 million. The $90 million would be used to renovate the hotel, which opened in August 2000 and filed for Chapter 11 bankruptcy protection a year ago Saturday.

Pinnacle has a registration statement on file with the Securities and Exchange Commission for the sale of stock, bonds and warrants for up to $500 million.

Colony Capital earlier this year acquired the Resorts International in Atlantic City for $140 million and sold its Harveys casino franchise, to Harrah's Entertainment Inc. for $675 million.

Colony and Pinnacle would each hold a 40 percent stake in the property and Marriott, 20 percent.

The source said the $437.5 million in bank debt would be restructured with a longer term at a lower interest rate.

Representatives of the Mariott and Pinnacle could not be reached for comment. A spokesman for Colony had no comment on the matter.