Aladdin completes financing

Aladdin Gaming LLC said it has completing an $826 million financing package to build a new 2,600-room Aladdin hotel-casino that will open in 2000.

The deal includes $115 million of 13.5 percent bonds, a $410 million bank credit facility with a blended interest rate of 9.07 percent and a capital lease agreement of $80 million.

The 13.5 percent rate reflects the non-investment grade -- junk -- rating the notes received largely because of heightened competition on the Las Vegas Strip.

The remaining $221 million in equity comes from Aladdin Gaming, 75 percent of which is owned by New York-based Sigmund Sommer Trust and 25 percent by London Clubs International PLC.

London Clubs paid $50 million for its stake in Aladdin Gaming, which will hold a 50 percent equity position in the 1,000-room, $250 million music-themed hotel casino planned at the site by Planet Hollywood International Inc.

Aladdin Gaming President Richard Goeglein said construction on the Aladdin hotel-casino will begin "immediately." The 31-year-old Aladdin closed Nov. 25 and is to be imploded in either late April or early May.

The overall complex, which will feature a theme based on a mystical fantasy and legend, sits on 34 acres on the Strip across from Bellagio and next to Paris, two new resorts scheduled to open over the next year and a half.

As part of the Aladdin hotel-casino, London Clubs will develop a gaming salon and hospitality facilities fashioned after European casinos, said James McKennon, the hotel's president and chief executive officer.

TrizecHahn Centers, a Toronto-based real estate developer and investment firm, and an Aladdin Gaming affiliate will develop and manage Desert Passage, a high-end entertainment and shopping facility within the Aladdin complex, McKennon said.

The 462,000 square-foot Desert Passage and the Planet Hollywood hotel-casino will be financed separately from the Aladdin.

While Planet Hollywood's stock price has been battered on Wall Street due to disappointing financial results recently, McKennon said the entertainment company "is fully committed to this as a keystone for their future growth."

He said the company, which has a strong balance sheet and cash flow, is planning to begin the financing process soon.

Bank of Nova Scotia and Merril Lynch & Co. arranged the $410 million bank facility, the largest bank loan ever received by an independent, non-public casino operator, Goeglein said.

"The favorable terms and conditions of our financing achieved our goal to establish a highly competitive capital structure," he said.

Merrill Lynch and Credit Suisse First Boston were the lead underwriters of the $115 million of Aladdin Gaming notes, which will ultimately be publicly traded, McKennon said.

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