The Planet Hollywood brand and its entertainment theme are key elements in a new bid for the bankrupt Aladdin, industry sources said Monday.
Orlando, Fla.-based Planet Hollywood would contribute its movie memorabilia, its name and its celebrity pull to the 2,567-room megaresort, but would likely contribute no money to the deal, said the sources, who spoke on condition of anonymity.
“There are two major problems with the Aladdin,” one source said. “The property has no must-see attractions to pull in customers from other properties. And the place is merely a bed bank, a dormitory providing customers to properties with excitement.”
The sources said Planet Hollywood would partner with an unnamed lead operator to take the Aladdin out of bankruptcy.
“The (Aladdin’s) bankers are scrambling trying to find a credible operator to turn the property around,” said another source. “The Planet Hollywood name would allow the new Togel Hongkong operators to get rid of the troublesome Middle Eastern theme, as well as the old name.”
The source expects the bankers to identify the best possible bidder for the property, one that can contribute capital and expertise.
The bankers would loan the prospective buyer the lion’s share of an anticipated $450 million to $500 million purchase price, which would pay off most or all of the property’s secured creditors.
The Aladdin owes secured creditors $540.3 million, including about $70 million for slot loans and leased equipment, $85.2 million to unsecured creditors and $2.6 million in priority tax claims.
By ending the property’s bankruptcy protection, the Aladdin bankers could remove the Aladdin’s sizable mortgage, about $430 million, from their portfolio of nonperforming loans.
Aladdin lawyers have until Monday to file the property’s sales-procedure plan with Bankruptcy Judge Clive Jones, who earlier this month also gave Aladdin bosses until Jan. 30 to try to get the support of property creditors for the plan.
Sources were unable to identify the lead operator that would partner with Planet Hollywood in an Aladdin bid. They said the restaurant chain would likely collect a share of Aladdin profits in exchange for contributing its brand.
Planet Hollywood operates 10 company-owned restaurants, and licenses its name to about 20 more outlets, far fewer than the 87 Planet Hollywoods and 10 Official All-Star Cafes it owned or operated before filing for Chapter 11 bankruptcy protection in October 1999.
The company emerged from bankruptcy in 2000 with Planet Hollywood co-founder and CEO Robert Earl controlling about 70 percent of the company’s shares, but filed for Chapter 11 protection again in October 2001.
The company’s creditors last month approved a second reorganization plan, one that would keep Earl as CEO, controlling 10 percent of the company. Bondholders would control 51 percent.
Earl was in London on Monday, and declined to comment on reports of his company’s interest in the Aladdin. He did, however, acknowledge his company’s long-standing interest in Las Vegas.
The company owns Planet Hollywood in the Forum Shops at Caesars, and its Official All-Star Cafe closed a few years ago.
Planet Hollywood had an announced deal to license its name to a company that wanted to buy the Desert Inn from then-owner ITT, but the deal collapsed in 1997.
Planet Hollywood would have lent its brand name, star power and movie memorabilia collection for a stand-alone $850 million Strip resort.
Another deal made with Aladdin developers to open a $250 million music-themed boutique resort on the site, Sound Republic, fell through in 1998.
“We’ve been looking at creating a concept in Las Vegas since 1997,” Earl said.
A planned Aladdin bid by Pinnacle Entertainment and Colony Capital may have been undermined by the companies’ frustration with the slow pace of negotiations to buy the property out of bankruptcy protection, sources said.
One insider said bosses at California-based Colony were “washing their hands” of a deal they had planned to buy the Aladdin.
“We’re effectively done,” the source said at the time.
Sources said Pinnacle has not completely ruled out a bid for the property.
KPMG Corporate Recovery Services partner Jeff Truitt declined to comment when asked about a Planet Hollywood component to a possible Aladdin bid. The Aladdin hired Truitt and KPMG to sell the bankrupt property.