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Aladdin Buyer Moves to Reject Contracts

26 August 2003

Las Vegas Sun

by Richard N. Velotta

LAS VEGAS --Attorneys for a restaurant in the Aladdin hotel-casino have filed an objection to the resort's reorganization plan in U.S. Bankruptcy Court after the restaurant landed on a list of companies whose contracts wouldn't be renewed when ownership of the resort changes hands.

P.F Chang's China Bistro Ltd., which leases 11,351 square feet at the Aladdin for an Asian restaurant, filed the objection Friday.

Confirmation of the Aladdin's reorganization plan will be the subject of a court hearing Thursday. The 2,587-room Strip resort is being sold to a company fronted by Planet Hollywood co-founder Robert Earl for $635 million. Approval of the reorganization plan is a key hurdle for the new owners to clear before they can buy the resort and convert it into a motion picture-themed Planet Hollywood hotel-casino.

An attorney for P.F. Chang's said Monday that he is continuing discussions with hotel management about the restaurant's status. Attorney Rob Charles said it is unclear whether Earl's company, OpBiz LLC, will renegotiate and assume some of the contracts listed on the list of rejected leases.

"In discussion between counsel on Aug. 20, the debtor informed P.F. Chang's that OpBiz might assert that the proposed sale of the hotel and casino was intended to be free and clear of tenant rights," the objection filing says. "P.F. Chang's objects to entry of any order that would abrogate the rights provided to it (under bankruptcy code) if the subject lease is rejected.

OpBiz has until 30 days prior to the effective date of the reorganization plan to determine whether an existing lease would be rejected. The plan's effective date would be set when the reorganization plan is approved and would occur after the sale closes.

Under bankruptcy code, Aladdin owners are required to file a list of rejected and assumed leases so that creditors can consider them when they vote for or against the plan. Attorneys for the Aladdin filed those lists Aug. 1 and Monday was set as the deadline for filing objections.

The agreement with P.F. Chang's is among 29 contracts Aladdin Gaming LLC listed in the notice of intent to reject.

P.F. Chang's, which signed a 15-year lease with a five-year option with the Aladdin in February 2000, pays the Aladdin 5 percent of its gross sales under terms of the lease. Charles said the restaurant filed its objection to establish its rights if the P.F. Chang's lease is rejected.

Other contracts listed as rejected include five deals with subsidiaries of Sprint Corp., the dominant local telephone service provider in Nevada, for local phone service, Internet access, vending machines for prepaid calling cards, pay phones and service contracts.

Also on the list of rejected contracts are deals with Mikohn Lighting & Sign, Pepsi-Cola Co., IKON Office Solutions Inc., Global Cash Access Inc., Hospitality Network Inc., Superior Coffee, Walters Golf, Compu-Cash Systems of Nevada, AT&T Wireless Services of Nevada Inc., Lebenson Actuarial Service, Catalyst Rx Inc., Stratton Warren Software Inc. (now known as Inter American Data), Synxis Corp., London Clubs International PLC and several theatrical companies using the Aladdin Theatre of the Performing Arts.

Aladdin attorneys also filed a list of 192 contracts the owners intend to assume and assign.

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