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Source: Aladdin Sale Possible By October

LAS VEGAS -- Several offers to buy the bankrupt Aladdin have already been made, and a sale of the $1.05-billion megaresort is possible by October, an informed source said Tuesday.

Speaking on condition of anonymity, the source said that a sale by early fall is expected, but isn't a certainty.

With the property generating positive cash flow, there's no timetable forcing a quick sale, the source added.

"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."

KPMG partner Jeff Truitt didn't return a Tuesday phone message, but a second anonymous source said a sale depends on Truitt's ability to find a buyer willing to pay enough to cover the property's bank debt of about $435 million.

"The banks won't sell unless they'll get 100 cents on the dollar," the source said.

Atlantic City casino operator Colony Capital submitted a March bid of about $350 million for the 2,567-room property, the Review-Journal reported.

The second source said that Colony has withdrawn its bid.

"If you leave a bid out there, it's like you're bidding against yourself," the source explained.

Las Vegas-based Millennium Management, the company that operates Detroit's Greektown casino and has a 10-year contract to run the Rampart Casino at the JW Marriott in Summerlin, is another prospective bidder, the source said.

If it acquired the property Millennium Management would run the Aladdin's casino, with a major-brand hotel operator running the hotel, the source added.

Millennium Management principal Bill Paulos didn't return a Tuesday phone message.

Spokesmen for the two Las Vegas-based operators most often mentioned as possible Aladdin suitors declined to say if their companies would take part in the Aladdin sales process.

"Never say never, but it would have to be an extremely attractive price," Park Place Entertainment spokesman Robert Stewart said.

MGM Mirage spokesman Alan Feldman said: "We're not actively pursuing this, but we wouldn't rule out looking at it."

Unsecured creditors' lawyer Frank Merola said recently that Truitt was allowing financial markets to decide if and when the bankrupt megaresort should be sold.

"The property is making money, so the debtor can afford to let the market decide the time line," said Merola, whose clients are owed $85.7 million by the megaresort.

Property lawyer Gerald Gordon declined Tuesday to identify Aladdin bidders or their bids.

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

May expenses jumped to $19.5 million, compared with $14.7 million in April and $22.1 million in March.

The property reported a net loss of $423,369 in May, compared with a net profit of $2.7 million in April and a $1.1 million net loss in March.

Aladdin executives filed for bankruptcy protection in September after property executives said they couldn't continue paying the property's debt.

The Aladdin owes secured creditors $542.5 million, including about $70 million to companies leasing equipment and providing slot machine loans.

Merola's clients earlier this month filed a U.S. Bankruptcy Court complaint, asking Judge Clive Jones to void a range of security interest claims made by the Aladdin's top creditor, a bank group led by the Bank of Nova Scotia that is owed about $435 million.

The unsecured creditors charge that the bankers incorrectly claimed a security interest in Aladdin property, casino markers and cash.

If Merola's clients prevail and the bankers claims are disallowed, the unsecured creditors could recover more of the proceeds of an eventual sale.

Merola estimated the total value of the contested claims at between $50 million and $60 million.

"This would be significant because it affects the ownership leverage," he said.

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