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Aladdin Reports Third Straight Monthly Loss in July

The bankrupt Aladdin recorded its third straight money-losing month in July, the company reported in a recent U.S. Bankruptcy Court filing.

But the results are better than they appear, Deutsche Banc Alex. Brown casino industry debt analyst Andrew Zarnett said.

The property reported a net loss of $2.5 million in July after a $3.5 million loss in June and a $423,369 loss in May.

Aladdin reported a net profit of $2.7 million in April and a $1.1 million net loss in March.

But the Aladdin's monthly results were better than Zarnett expected.

Mandalay Resort Group President Glenn Schaeffer cited an early summer Strip hotel room price war as being largely responsible for an 18.8 percent drop in Luxor's operating cash flow, and Zarnett said the Aladdin competes for the same customers as Luxor.

"Given the competitive July environment on the Strip, the Aladdin's performance is an improvement," said Zarnett, who has been one of the Aladdin's toughest Wall Street critics. "There's strong price competition, yet they improved their bottom line, or at lest reduced their loss."

Aladdin Chief Financial Officer Tom Lettero's most recent monthly financial status summary filed with the bankruptcy court reported $18 million in July revenue, compared with $16.3 million in June, $19.9 million in May, $21.8 million in April and $25.5 million in March.

July expenses were $19.9 million compared with $19 million in June, $19.5 million in May, $14.7 million in April and $22.1 million in March.

The Aladdin owes its secured creditors $540.3 million, including about $435 million to bankers holding a deed of trust on the property and $70 million to companies leasing equipment and providing slot machine loans. Unsecured creditors are owed $85.2 million and the property owes $2.6 million in priority tax claims.

"Given the more competitive environment on the Strip, the Aladdin had a good month," Zarnett said.

Aladdin Chief Executive Officer Bill Timmins and Lettero were unavailable Thursday.

The consultant the Aladdin hired to sell the bankrupt property, KPMG Corporate Recovery Services partner Jeff Truitt, did not return a phone message and was unable to discuss the sales process.

An informed source who spoke on condition of anonymity recently said the property can afford to wait for a good offer.

"The marketing people are talking to a number of parties," the source said, referring to Aladdin financial advisor KPMG, the accounting firm responsible for marketing the property to prospective buyers. "They've got several offers."

Zarnett said Aladdin bondholders will likely recoup little or none of their investments.

"The bankers and the post-bankruptcy lenders will come out somewhat close to whole, but there won't be much left for other creditors," he said.

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