London Clubs ends Aladdin tale of woe

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The Independent Online

The Casino operator London Clubs International yesterday unveiled plans to raise £49m amid a debt refinancing, in a move that draws a line under the Aladdin saga. The Las Vegas Aladdin casino, in which it had a stake, filed for bankruptcy three years ago. Yesterday's fund raising and refinancing will enable London Clubs to settle all outstanding issues there for £6m.

The fund-raising exercise did not come as much of a surprise to City analysts, as it had been widely rumoured, given that debts of £160m matured at the end of June.

London Clubs is issuing one new share for every two held at a price of 70p each - a discount of about 40 per cent to Thursday's closing price - in a fully underwritten rights issue.

The deal will enable the company to start investing in its portfolio of 11 casinos ahead of government plans to deregulate the gambling industry.

London Clubs' chairman, Michael Beckett, said: "Following the fund raising, London Clubs will be extremely well positioned to enhance its existing portfolio of casinos and to exploit the opportunity that deregulation affords."

About £39m will be invested in its casinos over the coming three years with £6m earmarked for Aladdin and another £4m to cover the costs of the refinancing.

The chief operating officer, Barry Hardy, said the company could eventually recover a "little bit of money" from the Aladdin situation as some money would be available for unsecured creditors.

The moves were welcomed by the City yesterday. Analysts at Bridgewell said: "Not only does this remove the financial risk hanging over the company, as it had to repay all of its debt this year, but it puts LCI in a strong position to take advantage of deregulation."

A long-term incentive plan for about 30 senior staff was also unveiled yesterday in an effort to prevent key workers being poached ahead of deregulation. The London Clubs executive team and certain staff will be awarded a block of shares after the rights issue and at certain points after that but they will not vest unless certain performance criteria are met.

Mr Hardy said: "The board has been very concerned that with a lot of potential new entrants in the industry because of deregulation, there'd be a lot of new job opportunities."

Separately, London Clubs said yesterday that its trading prospects had remained unchanged since the publication of its half-year results last September.

The refinancing will be put to shareholders at a special meeting at the end of this month and the company hopes to have its new financial structure in place shortly after that.