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Aladdin's CEO Departs, Bankruptcy Filing May Be Imminent

LAS VEGAS — Aladdin Gaming Chief Executive Officer Richard Goeglein left the top job at the 13-month-old megaresort Friday, one day after company officials announced the hotel-casino could be forced to file for Chapter 11 bankruptcy protection after defaulting on recently scheduled debt payments and weeks of failed negotiations between the megaresort's bankers and owners.

Despite repeated public statements to the contrary by Aladdin executives, the property's chief financial officer, Tom Lettero, acknowledged the pending move in a late Thursday filing with the federal Securities and Exchange Commission.

The company missed an estimated $8 million payment due Aug. 28 that was needed to keep its books in line. That payment was postponed on several occasions, beginning in May, as Aladdin's owners negotiated with their financiers.

The company also defaulted on a $4.3 million payment for financing to lease furniture, fixtures and equipment and has until Sept. 28 to resolve the default with General Electric Capital Corp., according to the SEC filing.

If executives don't, the Aladdin casino could lose its gaming equipment.

Chapter 11 is the most common form of bankruptcy protection and frees a company from the threat of creditors' lawsuits while it reorganizes its finances, as it continues to operate.

The Regent Las Vegas is operating under Chapter 11 bankruptcy protection and is in the midst of a court-run auction to find a buyer.

An Aladdin spokesman declined to comment Friday about the filing or Goeglein's departure, and it was unclear whether Goeglein quit or was fired.

"Richard Goeglein is no longer with the company," Aladdin Gaming spokesman Fred Lewis said.

Aladdin Gaming Chief Operating Officer Bill Timmins is expected to temporarily head the megaresort, and no permanent replacement was named.

Goeglein ran the company since the 1998 implosion of the old Aladdin and its replacement with the $1.05 billion megaresort of the same name. The adjacent $300 million Desert Passage is owned by retail mall developer TrizecHahn Development Corp. of Toronto.

The Aladdin has temporarily closed the property's St. James Restaurant and "substantially" reduced staff to save cash and cut operating costs, according to the filing.

Earlier this week, the resort laid off 500 members of its 3,200-person workforce, as Strip room occupancy rates have plummeted in the aftermath of the Sept. 11 terrorist incidents in New York City, Virginia and Pennsylvania.

Critics have argued that the Aladdin was plagued by a poor design that limited foot traffic throughout the property, a hidden auto entrance from Harmon Avenue and a limited customer database.

They say London Clubs International, operator of the Aladdin's high-end casino area, has little grasp of the Las Vegas high-roller market.

London Clubs took a $71 million charge in the second quarter on its Aladdin investment, a massive disappointment that led to the July resignation of London Clubs Chairman Alan Goodenough, 58, who quit citing health problems caused by the stress of operating the Aladdin.

Throughout much of August, representatives of the megaresort's majority owners, the Sommer Family Trust and London Clubs, attempted to reach an agreement that would give the British company a controlling interest in the property.

Wall Street sources say financiers prefer a London Clubs-controlled regime to a Sommer-led operation, believing the Sommer family is split over the investment in the megaresort and has little interest in sinking more money into the property.

They also believe it would be easier to operate or sell the megaresort if it were owned by one entity.

But the talks between the two sides dissolved, with family trust managing partner Jack Sommer apparently seeking concessions for his interest that London Clubs was unwilling to grant, sources said.

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