Friday, June 20, 2003 | 11:08 a.m.
SUN STAFF AND WIRE REPORTS
Aladdin lawyers recommended to a judge today that the bankrupt hotel-casino be sold to a joint venture involving Planet Hollywood's co-founder and the Starwood hotel chain, eliminating the need for a high-stakes auction.
Aladdin attorney William Noall told judge Robert C. Jones that no qualified bidders emerged that were higher -- or better -- than Planet Hollywood's "stalking horse" bid of $645 million.
Further, Noall told the packed courtroom, the four bidders competing with Planet Hollywood lacked a key requirement -- a $12.5 million deposit.
But Jones said he still wanted to hear presentations from all the potential bidders.
The Planet Hollywood bid, favored by the Aladdin, is backed by Starwood Hotels and Resorts Worldwide Inc., of White Plains, N.Y., and New York financial firm Bay Harbour Management LLC.
Of the four potential bidders, three opted to make presentations before the judge. Those companies are Barron Gaming LLC, Great Casino Co. LLC, and Meruelo Group LLC. A fourth potential bidder, Don Galloway & Associates Inc., did not request to give a presentation.
The potential bidders were required to submit the $12.5 million cash deposit as well as a written statement that clearly states the differences between the Planet Hollywood bid and their own proposed bid.
Also, the potential bidders were required to identify the individuals behind the bids and as well as all people or companies that would be funding the bid.
Noall said none of the four potential bidders disclosed the individuals providing the funding and only two disclosed the identity of the people participating in their bids.
Early in the day, creditors expressed concern to Jones that what he could be hearing from the potential bidders, other than Planet Hollywood, regarding their bids would be hearsay.
The judge told the creditors that he would hear from them after the potential bidders had given their presentations.
Court records filed late Thursday show creditors endorsed OpBiz, a partnership involving Starwood Hotels & Resorts, Bay Harbour Management and Planet Hollywood CEO Robert Earl. OpBiz was named the "stalking horse" lead bidder in the bankruptcy case in May.
Major creditors and the casino "agree that no auction will be held, and the parties will support and hereby request designation of only OpBiz as the purchaser of debtor's assets," according to the court filing.
The filing names four other prospective buyers that failed to submit qualified bids and meet other requirements by a Tuesday deadline, including a group involving the Marriott International hotel company that was thought to be a rival to OpBiz. Each bidder was required to make a $12.5 million deposit to participate in the auction.
The $1.4 billion Aladdin opened in August 2000 and filed for Chapter 11 protection about a year later. The Aladdin owes unsecured and secured creditors more than $588 million.
As part of the OpBiz deal, the venture would assume $510 million of Aladdin debt and other liabilities. OpBiz would invest $90 million over three years in the 2,567-room hotel-casino. Starwood would invest $20 million and receive 4 percent of revenues plus expenses.
The Arabian Nights-themed resort across from the Bellagio hotel-casino and next door to Paris-Las Vegas resort would be branded as Planet Hollywood Hotel & Casino. It would be managed by Starwood through its Sheraton hotel brand. Starwood is the sixth largest hotelier in the nation with 126,664 rooms, according to Smith Travel Research.
Earl's group was chosen because it had "demonstrated substantial progress in its acquisition proposal," according to the court filing.
Marriott International had joined with Financial Capital Investment Co. to offer a competing bid.
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