Posted on: Thursday, May 17, 2001

Lucky gamblers help break the bank at Vegas casino

Associated Press

LAS VEGAS — The newest hotel-casino on the Las Vegas Strip is blaming a huge quarterly loss on unusually lucky gamblers.

Analysts said the $1.3 billion megaresort needs $8.7 million within two weeks to pay its bills, or it could be forced into restructuring or bankruptcy.

"I think it's really the banks' call at this point," said Jason Kroll, gaming analyst with Bear Stearns. "When you get the numbers, it's definitely a cold slap."

The Aladdin's growing financial predicament was outlined in the property's first-quarter financial report issued yesterday.

The property reported $8.3 million in cash flow for the three months ended March 31 — a 42 percent decline from the fourth quarter of 2000, and well below the $20 million cash flow needed each quarter to meet its fixed debt and lease payments.

The 2,567-room hotel and casino reported net revenues of $73.7 million — with a staggering net loss of $47.2 million.

The Aladdin said it was been hurt by a low table-game hold of 14.5 percent for the quarter, compared to an expected 17.5 percent.

The casino's average slot win per machine was $86 per day for the first quarter, or about $20 a day below the average at other Strip hotels.

Andrew Zarnett, gaming analyst with Deutsche Bank Alex. Brown, called bankruptcy increasingly likely.

"It appears, based on their cash flow, that the company will have to go through some kind of restructuring," he said. "The only way they could be saved is for the company to receive a significant amount of capital."

The Aladdin said the Sommer Trust and London Clubs International will need to pump $13.3 million into the Aladdin under a "keep-well agreement" with the Aladdin's lenders.

The partners have already paid $4.6 million of this requirement.