Planet Hollywood-Aladdin deal in jeopardy

The foundering global fortunes of Planet Hollywood International Inc. are jeopardizing plans for its joint venture with Aladdin Gaming Holdings LLC in Las Vegas.

Aladdin Gaming said Thursday talks about developing "Sound Republic," a Planet Hollywood music-themed hotel-casino at the $1.3 billion Aladdin gaming and entertainment complex on the Strip, have stalled over uncertainties about Planet Hollywood's ability to finance its part of the venture.

As a result, Aladdin said, it is seeking other joint-venture partners for the project. Planet Hollywood officials could not be reached for comment.

Last month, Planet Hollywood said increased competition to its 87 themed restaurants and 10 All-Star Cafes around the world had resulted in lower customer volume and a $1.4 million second quarter loss, compared with a $16.3 million profit in the 1997 quarter. Revenue fell to $105.1 million in the latest quarter from $121.9 million in the year-earlier period.

Planet Hollywood stock closed at 4 1/16 a share Thursday, up 1/16. The Aladdin announcement was made after the close of trading. Planet Hollywood stock has fallen from a 52-week high of 20.

Planet Hollywood Chief Executive Robert Earl said last month the company would continue cost-cutting measures and hinted that its capital-spending programs would be put on hold until financial results improve. It also hired investment bankers Bear Stearns & Co. and Goldman Sachs as financial advisers.

"In light of (Earl's) previous announcement," the Aladdin statement said, "the company is not certain of Planet Hollywood's ability to participate in the Music Project. Therefore, Aladdin intends to pursue additional prospective joint-venture partners..."

The announcement noted that the original agreement between the two entities called for the partners to obtain "certain financial commitments and the completion of certain documents."

"Although negotiations have stalled," Aladdin President Richard Goeglein said, "the company would renew discussions with Planet Hollywood if and when it is appropriate."

He emphasized that Aladdin remains committed to developing a music entertainment-themed hotel-casino as part of the 35-acre complex. The music project would be the second hotel-casino on the site, which would also feature a retail shopping mall.

"Music Project" is the third dining and entertainment brand launched by Planet Hollywood; it opened a Music Project in London last month.

The company planned to build a $250 million, 1,000-room hotel-casino at the Aladdin site adjoining a much larger Aladdin Gaming project.

Aladdin Chief Financial Officer Cornelius Klerk said the door is still open for Planet Hollywood if it can get financial commitments quickly enough to avoid delaying the overall development.

In the meantime, though, Aladdin is negotiating with other joint-venture partners in the entertainment business.

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