Posted on: Tuesday, April 03, 2001
Aladdin casino owner has high debt payments
Bloomberg News Service
LAS VEGAS Aladdin Gaming Holdings Llc, which runs a $1 billion Las Vegas casino that opened in August, said in a Securities and Exchange Commission filing that its cash on hand won't be enough to make debt payments this year.
The company said it may take on additional debt, seek a "cash infusion" or sell land adjacent to the casino to make the $65.7 million in payments due in 2001. The company's liabilities total $741 million. If Aladdin can't raise more cash or reach agreements with creditors, its ability to operate as a "going concern" would be in doubt, the filing said.
The shortfall underscores Aladdin's vulnerability as a single-casino owner as slower U.S. economic growth and the California energy crisis cut into Las Vegas tourism.
"All (Aladdin's) numbers were weak in an environment that was relatively strong for competitors in the marketplace," said Bear Stearns Cos. analyst Jason Ader.
While MGM Mirage Inc. and Park Place Entertainment Corp. lured customers from other casinos and posted cash flow gains at most of their Las Vegas Properties last year, Aladdin said it lost $76.2 million, including $29.8 million of pre-opening costs.
The Aladdin is likely to "see its fortunes get worse," Ader said.
The Aladdin Casino cost $1.02 billion to develop and includes a 116,000-square-foot casino, plus a 15,000 square foot high-limits gaming section and 2,567 hotel rooms. The company is 60 percent owned by real estate investor Jack Sommer and his family's trust fund. London Clubs International Plc, a U.K.-based casino company, owns the remaining 40 percent.
The company said it has enough cash to operate the casino, which had revenue of $137 million in 2000.
London Clubs invested $5 million in January and Sommer Trust put an additional $7 million into the casino on March 30, Aladdin said. The Aladdin's hotel had an average daily rate of $129 a night with occupancy of 86 percent.
The company said it hired more marketing executives to market the casino as a "must-see" destination, the filing said.
