Aladdin Gaming's bank debt has been steadily trading up over the last few months and reportedly hit 88 1/2 in a trade early last week. Merrill Lynch was rumored to be the seller, but the amount could not be determined. Buyers were offering 77 for Aladdin's bank debt in early June, and by July, levels had moved up to the low 80s. There were no trades reported last week. Tom Lettero, cfo, did not return calls for comment. Calls to Ben Holden, spokesman, were also not returned.
The climb in bids comes even as Moody's Investors Service last week downgraded the company's credit facility to Caa1 from B3. According to the rating, if the company does not renegotiate its credit agreement, existing cash on hand and internally generated cash flow will not be enough to fund the company's working capital and principal and interest requirements over the next 12 months. Some dealers agree with the negative outlook on gambling resorts, but say Aladdin's levels have gotten a boost due to the increasing equity stake of London Clubs. "Aladdin has pulled away from another private investor and gone towards London Clubs, which is considered more professional," a trader said.