Aladdin handover to new owners could be delayed

Adam Goldman

Thursday, April 29, 2004 | 10:49 a.m.

It's unlikely that the new owners of the Aladdin hotel-casino will take control of the bankrupt property in June as previously planned, Nevada's top gambling enforcement officer said Wednesday.

Dennis Neilander, Gaming Control Board chairman, said his investigators had not completed the intensive application process for the new owners' gambling license. The new owners must obtain the license before they can run the Las Vegas Strip property.

Neilander said he had planned to hold a license hearing this summer.

"I can't say exactly when," he said. "I don't know at this point."

A partnership that includes Starwood Hotels & Resorts, Bay Harbour Management of New York and Planet Hollywood CEO Robert Earl of Orlando, Fla., had planned to take over the casino in June.

The Arabian Nights-themed resort will be renamed Planet Hollywood Hotel & Casino.

Douglas Teitelbaum, managing principal of Bay Harbour Management, said Wednesday that everything was going smoothly and declined to discuss a possible delay.

The new owners had hoped to have a license hearing in June.

Bill Timmins, Aladdin president and acting chief executive, said a hearing might be held in August or September.

"I have nothing to indicate that this deal isn't closing," he said.

A federal bankruptcy judge approved the Aladdin hotel-casino's reorganization plan in August 2003, allowing the property's new owners to seek a state gambling license. As part of the purchasing plan, the partnership called OpBiz must take control of the property by August.

OpBiz has the option of extending the takeover date to the end of November by paying about $833,000 each month after August. If OpBiz doesn't complete the deal, the money and a deposit of $10 million goes to creditors.

If Opbiz does complete the deal, the money is refunded.

OpBiz intends to assume $510 million of Aladdin debt and other liabilities. OpBiz will invest $90 million over three years in the 2,567-room hotel-casino and keep all of its employees, except for a few senior management positions.

With Las Vegas hotel-casinos setting financial records in the first quarter of this year, the banks that originally financed the $1.4 billion Aladdin probably won't be clamoring for the sale to close.

"There is quite a bit of money going to the banks," Timmins said.

The Aladdin, which went bankrupt nearly three years ago, has improved its finances over the past 12 months. Cash flow for the first quarter of 2004 was $18.9 million, up from $17 million a year ago.

Timmins said the property had its best financial quarter to date and is running at record occupancy levels.

"The property is generating good amounts of cash right now," he said. "It's rolling along."