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Judge OKs Starwood-Led Bid to Buy Aladdin

June 21, 2003|From Bloomberg News

A group that includes Starwood Hotels & Resorts Worldwide Inc. and the founder of the Planet Hollywood restaurant chain will be allowed to buy the Aladdin Hotel & Casino in Las Vegas, a bankruptcy judge ruled Friday.

The purchase was endorsed by creditors for the property's owner, Aladdin Gaming, which filed for Chapter 11 bankruptcy in 2001, 13 months after the hotel opened. To complete the purchase, the Starwood-led group will assume $510 million of notes and invest $90 million into the hotel, Aladdin spokeswoman Tyri Squyres said.

White Plains, N.Y.-based Starwood and partners Robert Earl and Bay Harbour Management plan to transform the Las Vegas Strip property into a Planet Hollywood Hotel & Casino, Squyres said. Earl is co-founder of Planet Hollywood International Inc., a chain of theme restaurants.

The resort, which cost $1 billion to build and has 2,567 guest rooms, was hurt by a poorly designed entrance that failed to attract gamblers, Deutsche Bank analyst Marc Falcone said. The property includes the Desert Passage mall, owned by Chicago-based Trizec Properties Inc., a real estate investment trust.

Las Vegas hotels had an average occupancy rate of 89% last year, the Las Vegas Convention and Visitors Authority said. The average rate for the rest of the U.S. was 59%, according to Smith Travel Research.

The Starwood-led group's offer was announced in April. U.S. Bankruptcy Court Judge R. Clive Jones in Las Vegas decided not to hold an auction after four other prospective buyers were deemed unqualified by creditors, Squyres said.

Among the other bids was an offer by Marriott International Inc. and Financial Capital Investment Co. Marriott, the largest U.S. hotel company, had offered to invest $25 million as a partner with Los Angeles-based Financial Capital.

Financial Capital's bid didn't exceed the Starwood offer by $7.5 million, as required in the sales procedure approved by Jones, according to the creditors' status report filed Thursday.

The Starwood venture still must acquire a gambling license from the Nevada Gaming Commission. That could take six months to a year.

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