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Banks Could Take Stake in London Clubs

8 November 2001

LAS VEGAS, Nevada -– The Aladdin's banks are close to a deal to take an ownership stake in London Clubs International in exchange for releasing that company from its capital contribution obligations to the bankrupt Las Vegas Strip casino.

When the Aladdin declared bankruptcy in late September, LCI and the Sommer Trust -- the owners of the Aladdin -- became immediately obligated to make a $150 million "keep-well" payment to the resort. LCI, already in financial difficulty, soon after began talks with its 16-bank syndicate to win release from this payment. LCI has previously estimated its share of the payment at $37.5 million.

The Times of London, citing no sources, said LCI is close to reaching a deal. Under this agreement, the Times said, the banks would waive LCI's obligation in exchange for a "significant stake" in LCI. Most of the banks have already agreed to the deal, and an announcement could come this week, the paper said.

"They (LCI) have made it clear they're in negotiations to release themselves from the keep-well obligation, but as far as the terms of that release, they're not making any comment," Luke Morton, spokesman for LCI, said this morning. "Talks are going well, and I'm expecting something very soon."

LCI's lead banker, the Bank of Nova Scotia, is also the lead banker for the Aladdin.

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