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Aladdin Bid May Not Happen

15 November 2002

by Jeff Simpson

LAS VEGAS--The Aladdin's bankers have hurt their own efforts to find a buyer for the bankrupt $1.05 billion megaresort, insiders say.

Pinnacle Entertainment and Colony Capital executives have been frustrated by negotiations to buy the property out of bankruptcy protection, with insiders who spoke on condition of anonymity saying that Aladdin representatives have changed their minds about key issues already agreed on.

"We have a deal and then they come back with material changes," one source said. "They can keep it."

Aladdin executives know that Pinnacle and Colony can't wait indefinitely for a decision, but have been unable to pull the trigger on a deal, insiders said.

One insider said Colony executives were "washing their hands" of their plans to buy the Aladdin.

"We're effectively done," the source said.

Pinnacle and Colony had been expected to offer about $500 million for the Aladdin along with a commitment to invest about $75 million to renovate the property, the source said.

The Aladdin's bankers would have loaned Pinnacle and Colony the money to buy the property. The bankers, owed about $430 million secured by a mortgage on the property, would have loaned Colony and Pinnacle the money for a five-year term at reduced interest rates.

Sources said Pinnacle has not ruled out a bid for the 2,567-room property.

Los Angeles-based Colony Capital owns Resorts International hotel-casino in Atlantic City but owns no Nevada casinos since selling Harveys to Harrah's Entertainment last year for $675 million.

Pinnacle Entertainment operates seven casinos in Louisiana, Mississippi, Indiana, Nevada and Argentina. The company operates the Boomtown casino in Reno, and recently announced plans to move its corporate headquarters from Glendale, Calif., to Las Vegas.

Aladdin lawyers have until Dec. 2 to file the property's sales-procedure plan with Bankruptcy Judge Clive Jones.

Jeff Truitt, the KPMG partner in charge of marketing the Aladdin, declined to comment on the property's sales process.

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