London Clubs International announced Friday it has finally reached a deal extricating it from its financial obligations to the bankrupt Aladdin hotel-casino on the Strip.
The Aladdin’s Sept. 28 bankruptcy filing triggered an immediate “keep-well” payment of $150 million, due from LCI and the Sommer Trust — the Aladdin’s equity owners. LCI, pushed to the financial brink by losses from the Aladdin, had been unable to make the payment, and immediately began negotiations with its bankers to be released from the payment.
LCI had estimated its share of the payment was $37.5 million.
On Friday LCI announced it had reached a deal. In exchange for the release, LCI agreed to issue warrants to the banks giving them the right to acquire a 5 percent stake in LCI, the Times of London reported. The warrants only become effective if LCI moves above 50 pence per share.
LCI must also make a payment of 10.5 million pounds ($15 million) to the banks in seven years, the Times said.
LCI shares shot up nearly 60 percent Friday on the news, closing at 28.25 pence. They rose another 7 percent today to 30.25 pence.
Bill Timmins, the Aladdin’s chief operating officer, said Friday’s deal between LCI and the banks will not change LCI’s 40 percent equity position in the Aladdin or its management structure.
“Nothing changes. The composition of the board does not change,” said Timmins, who is also a top executive with LCI. “I will stay here and see this through this (bankruptcy) process.”
Michael Solow, an attorney for the bank group, said Friday that LCI’s deal with the banks does not get the Sommer Trust off the hook for its obligations under the keep-well agreement.
“We’re in discussions with them (the …