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Gaming Guru

Richard N. Velotta

Aladdin Turns Profit as Licensing Hearing Nears

25 August 2004

LAS VEGAS -- The Aladdin hotel-casino, nearing the end of a marathon run in bankruptcy, reported a profit of $3 million in July, according to a filing in U.S. Bankruptcy Court.

Executives for the company planning to take over the 2,567-room Strip hotel will appear before the Nevada Gaming Commission for licensing Thursday.

Commissioners will meet in Carson City to consider suitability and licensing for Robert Earl, co-founder of the Planet Hollywood restaurant chain, Douglas Teitelbaum, managing principal of Bay Harbour Management LLC, New York, and Barry Sternlicht, chairman and chief executive of Starwood Hotels & Resorts Worldwide, White Plains, N.Y.

BH/RE LLC is listed as the company acquiring the Aladdin, which entered Bankruptcy Court in September 2001. Last year Earl's group emerged as the winning bidder for the property, acquiring it for $637 million.

Since then, state Gaming Control Board investigators scrutinized Earl and Teitelbaum as new applicants to the gaming industry in Nevada. Sternlicht and Starwood already had been investigated as the hotel operator of the Westin Casuarina, formerly the Maxim hotel-casino.

Earl was grilled by the Control Board in a six-hour hearing earlier this month, primarily about concerns it had with Planet Hollywood's two previous bankruptcies. But ultimately, the board recommended approval for Earl and his partners.

A representative of the Aladdin said Tuesday that if the Gaming Commission approves the application, the transition to Earl's control would occur Sept. 1. A spokeswoman for Earl has said that the transition to the property as the Planet Hollywood hotel-casino wouldn't occur immediately.

What is anticipated as being one of the final monthly operating reports for the Aladdin showed the property had July revenue of $21.7 million, expenses of $17.8 million and bankruptcy-related expenses of $842,426.

In the same month a year ago, the company reported revenue of $21.9 million, expenses of $23.1 million and bankruptcy expenses of $1.2 million, for a net loss of $2.4 million.

During the 35 months the resort has been in bankruptcy, the property lost $96.3 million while generating revenue of $691.4 million. Bankruptcy expenses totaled $53.2 million during that time frame.

Figures presented to the Control Board by Earl showed the new owners expect $276 million in revenue with cash flow of $43.1 million the first year, growing to $434 million in revenue in year five with $121.4 million in cash flow.