Aladdin’s strong quarter sets stage for ‘stalking horse’ bid

Monday, April 21, 2003 | 10:51 a.m.

SUN STAFF AND WIRE REPORTS

The bankrupt Aladdin hotel-casino reported the strongest first quarter in its history, buoyed by high occupancy rates through the weeks leading up to the war in Iraq.

The third consecutive month of positive cash flow was reported in a monthly operating report that was submitted to the U.S. Bankruptcy Court in Las Vegas on Friday.

The financial report set the stage for a possible "stalking horse" bid for the property from a partnership believed to include Planet Hollywood and Starwood Hotels and Resorts.

On Friday representatives of those companies had no comment on the reports that they are pursuing acquiring the Aladdin.

However, a top executive at Green Valley Ranch Station Casino in Henderson, Mike Mecca, already has said he expects to take an executive post at the Aladdin when the transaction occurs.

The $1.2 billion Strip resort opened in August 2000, but filed for Chapter 11 bankruptcy protection in September 2001. As part of the company's reorganization plan, a new owner was sought. A "stalking horse" bid for the property was expected by a partnership involving Colony Capital LLC, Los Angeles, Marriott International Inc., Bethesda, Md., and Pinnacle Entertainment Inc., Las Vegas, but that died earlier this year when Pinnacle announced it was no longer pursuing the Aladdin.

Meanwhile, the 2,567-room property has picked up financial momentum with several improvements and additional marketing late last year. In the past three months, occupancy rates climbed with events and conventions that have benefited the entire city.

Court records show that the Aladdin posted a profit of $930,179 last month, far surpassing February's $171,201 and January's $96,000.

The Strip casino improved its March cash flow to $6.33 million, compared with $5.35 million in February and $5.34 million in January. In March 2002 the casino had cash flow of $5.8 million.

Cash flow, which reflects earnings before interest, taxes, depreciation and amortization, is a common measure of profitability in the gambling industry.

For the quarter ending March 31, the Aladdin generated about $17 million in cash flow compared with $10.5 million in the period last year.

"All of our business is showing positive signs," Bill Timmins, Aladdin chief operating officer, said Friday.

Occupancy rates for the first quarter were 97.6 percent with room rates averaging about $114 thanks to a local NASCAR race in March and other happenings in Las Vegas.

Revenue increased slightly to $22.7 million for March, compared with $20.1 million in February and $21.4 million in January. Revenue had dipped to $18.3 million in December after rising to $22.5 million in November.

Timmins said a large part of the success is due to the casino's 2,500 employees sticking with the struggling megaresort, which has laid off a third of its original work force. Investment in the property, such as adding a theater, nightclub and room deals, also have attracted visitors.