Saturday, June 21, 2003
Copyright © Las Vegas Review-Journal

THE STRIP: Planet Hollywood wins Aladdin

Scramble for hotel-casino ends when judge refuses to accept rival bids

Doug Teitelbaum Bay Harbour Management official part of group that successfully bid for Aladdin

Hello, Planet Hollywood. Goodbye, Aladdin.

A federal bankruptcy judge Friday refused to accept offers from other interested bidders, effectively approving Planet Hollywood's $635 million offer to buy the bankrupt Aladdin.

Judge Clive Jones ruled two other offers weren't clearly better than the Planet Hollywood bid, then approved Aladdin Gaming's request to name the group fronted by Planet Hollywood Chairman Robert Earl as the winning bidder.

The ownership transfer will take place after the Planet Hollywood ownership group, including Earl, Doug Teitelbaum of Bay Harbour Management and Starwood Hotels and Resorts Worldwide are licensed by Nevada gaming regulators.

Teitelbaum kissed Earl when Jones said he would follow creditors' wishes and refuse to accept one of the competing bids as a bona fide "higher and better" offer, a requirement of the sales procedure order he issued last month.

The new ownership group exchanged hugs all around.

"This is an emotional time for me," Earl said, reflecting on the opportunity to do something great in Las Vegas. Planet Hollywood chain has sought bankruptcy protection twice itself. "This has been an incredible effort, and I couldn't be happier."

Teitelbaum gushed: "It's a great day."

The property will be renamed Planet Hollywood Hotel & Casino, a Sheraton Hotel, and the hotel will be managed by Starwood and participate in its reservation systems and frequent guest programs.

Earl said he plans to transform the megaresort, using $90 million to dramatically improve its Strip frontage, including using Planet Hollywood's logo to create a giant blue globe entryway.

The top two all-suite floors of the property will be rethemed, with the top floor hosting "celebrity suites" that will be themed based on the life and work of leading movie stars, entertainers and athletes. The next-to-top floor's rooms will carry movie themes.

A television studio overlooking the Strip is planned, as are weekly movie premieres, Earl said.

Earl, known for his friendships with many celebrities and for his ability to attract stars to openings for his Planet Hollywood restaurants, pledged that the Planet Hollywood Hotel & Casino opening night will be one to remember.

He declined to say what he has in store, but insiders noted his personal friendship with singers Elton John and Rod Stewart, suggesting that they might be part of an opening extravaganza.

Earl plans to keep Aladdin's 2,000-plus work force.

"They've performed wonderfully during a difficult time and they'll all make superb Planet Hollywooders," Earl said after the hearing.

Several employees working at the Aladdin were asked after the court hearing about the winning bid, but they said they were told not to comment.

Earl's group already paid a $12.5 million deposit, and must pay another $5 million by Monday. The buyers are also assuming $510 million in Aladdin debt owed to bankers and leaseholders.

Two other bidders made pitches to buy the property during Friday's marathon bankruptcy court session.

Financial Capital Investment Co. fronted a group that offered terms close to those offered by Earl, with a bit more cash up front, but Jones said he would follow creditors' guidance in refusing to qualify the group's bid as better than Planet Hollywood's.

Creditor lawyers said they were unwilling to allow Financial Capital to assume their $510 million in Aladdin debt, even though the group promised to pay down the amount by $45 million in cash after closing.

Creditor lawyers also said they were troubled by the uncertain nature of Financial Capital's deal with Marriott International to run the hotel.

Winning bids would have had to top the Planet Hollywood bid by at least $7.5 million, the amount that Planet would have received if another bidder won an auction for the Aladdin.

Failed bidder Richard Alter of Financial Capital said he wished Earl and his team the best of luck.

"Congratulations to Planet Hollywood," Alter said after Jones said he wouldn't qualify the Financial Capital bid. "I look forward to the opening."

A second group, Meruelo Group LLC, initially offered $510 million in cash but upped its offer to $530 million in court Friday. But creditors were unwilling to accept the bid, partly because the group had failed to pay the required $12.5 million deposit on time, instead depositing only $7.5 million in escrow.

The group's cash offer required it to borrow $330 million, but the creditors said the money wasn't guaranteed to be there.

"(The creditors) think the risk for the other bids is too high," Jones said before ordering the sale to Planet Hollywood. "The bottom line is what the (creditors) want."

Former Green Valley Ranch boss Mike Mecca has been signed to run the hotel-casino. Mecca said he expects to apply for gaming regulators' permission to begin working in the casino in an observer's role until the new group is licensed.