Las Vegas Sun

March 28, 2024

New bidder emerges for bankrupt Aladdin

A new bidder comprised of Southern California real estate developers and Asian investors has emerged to buy the bankrupt Aladdin hotel-casino on the Las Vegas Strip.

The offer from KenPat Entertainment Group and Calstar Properties Inc., Laguna Niguel, Calif., is the third group to express interest in acquiring the $1.2 billion, 2,567-room Strip resort, currently operating under Chapter 11 bankruptcy protection.

A group led by Planet Hollywood co-founder Robert Earl has emerged as the front-runner to acquire the Aladdin with a "stalking-horse" bid of $635 million. Another challenger is Los Angeles businessman Richard Alter, who wants to transform the property into an Asian-themed resort.

The Planet Hollywood deal is backed by Starwood Hotels & Resorts, White Plains, N.Y., which wants to brand the Aladdin's hotel as a Sheraton property. Alter, whose group owns the Omni Hotel in Los Angeles, says his bid is backed by Marriott International Inc., Bethesda, Md. Marriott has had no comment on the deal.

Few details have emerged on the newest bidder, which met two weeks ago with Aladdin management with its proposal.

Federico Sayre, a Santa Ana, Calif., attorney and an investor in the KenPat-Calstar proposal, said the principals in the deal have decided to keep most of the details of the plan -- including their identities -- confidential for now.

But many specifics should emerge June 17, the deadline the U.S. Bankruptcy Court has set for qualified bids. A court-supervised auction is then scheduled June 20 for the Aladdin.

Sayre said KenPat is comprised of investors from Korea and Taiwan, while Calstar is a Southern California real estate developer. Sayre said a chief executive with experience in the gaming industry has been selected, but he would not say who it is.

Sayre said the partners plan to change the theme and the name of the property, but keep most its existing employees. He would not disclose the name or theme other than to confirm the current Arabian theme will be dropped.

"It's clever," Sayre said of the planned new look. "It's something softer and more consistent with the Bellagio across the street."

Sayre also said the partners plan "reconfigurations to the property to enhance the traffic flow." He said there are two alternatives under consideration concerning the fate of the Aladdin Theatre for the Performing Arts, the cavernous auditorium in the center of the property.

Sayre said the bidders are working with potential buyers of the Desert Passage mall, owned by Trizec Properties Inc., New York. Trizec has considered selling the mall and one of the potential buyers would utilize a small theater as part of its strategy, Sayre said.

Sayre said the KenPat-Calstar bid would be appealing to creditors because it would be an all-cash offer.

"In the other offers, they're asking the banks to loan them their money back so that there's very little cash in the deal," Sayre said. "It's kind of a 'hope-springs-eternal' arrangement because the lenders have to hope that the owners can make enough cash flow to pay the loans.

"Under our plan, the lenders take some immediate pain because some of the debt is written off, and I'm sure they've already written a lot of it off," he said. "But we're looking at cash flow based on current revenues."

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