Aladdin debt ratings cut

Standard & Poor's cut its ratings on Aladdin Gaming debt, citing a technical default that threatens continued construction funding unless banks approve amendments to lending agreements.

S&P said it lowered its corporate credit rating for Aladdin to triple-C from single-B and the rating on senior discount notes to double-C from triple-C-plus. S&P also put the new ratings on CreditWatch with negative implications, indicating further downgrades are possible.

S&P noted Aladdin and its general contractor, Fluor Daniel Inc., are in a dispute over changes in plans to build the new Aladdin hotel-casino on the Strip. The dispute is under arbitration.

"More importantly," said S&P, "a technical default has occurred under Aladdin's bank-credit facility, due to furniture, fixtures and equipment (FF&E) financing documents that were not amended along with proposed amendments to the credit facility."

S&P said it will monitor progress in Aladdin's negotiations to amend the bank-loan facility and its efforts to raise additional equity financing.

Aladdin officials said they expect to have a decision from their bankers on the proposed amendments later this week. Approval of the amendments could lead Aladdin's outside auditor, Arthur Anderson & Co., to remove its qualified opinion on Aladdin's financial report.

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