Casino firm faces huge payout

Britain’s leading casino operator London Clubs International was today facing a huge payout after its Las Vegas club Aladdin filed for bankruptcy protection on Friday.

LCI was in frantic talks with its bank backers to avoid paying its share of a debt repayments bill that could run to £100m.

The group, which owns six casinos in London, has a 40% stake in the Aladdin venture alongside the investment arm of US property group Sommer Trust.

The glitzy Aladdin resort, which includes a casino and a 2,567 room hotel, has been affected by poor trading since opening little more than a year ago.

An LCI spokesman said the last straw was the impact of the terror attack in the US three weeks ago.

‘‘Since September 11 there has been a severe downturn in the market. Americans are not flying to Las Vegas to have a good time,’’ he said.

Aladdin’s decision to file for Chapter 11 bankruptcy protection triggers debt repayment clauses in a deal struck between LCI, Sommer and Aladdin’s banks.

The banks, led by Bank of Nova Scotia, have ‘‘expressed a willingness’’ to lend up to £31m to keep Aladdin afloat in the short term.

But the repayment clauses could place a huge burden on LCI. It today warned it may have to write off its £80m investment in the casino.

The LCI spokesman said the £100m payout was the worse-case scenario and added the group was confident of reaching an agreement with the banks.

The Bank of Nova Scotia is also a lender to LCI.

He added: ‘‘Its far too early to speculate what would happen even if we could not negotiate some get out.’’

Reports yesterday said LCI may be forced to put itself up for sale. Interested companies were said to include Stanley Leisure and Rank.

In addition to LCI’s six clubs in London, which include 50 St James where the average wager is £5,000, the group runs a casino in Southend-on-Sea in Essex.

It also has two clubs in Egypt and one in South Africa, with others planned for Brighton, Northampton, Manchester and the Bahamas.

The group’s shares slid 1¼p to 12¾p today, a drop of 9%.