Alan Goodenough today resigned as executive chairman of London Clubs International, as speculation swirled on both sides of the Atlantic that his company is about to take control of the $1.2 billion Aladdin hotel-casino on the Las Vegas Strip.

In statement today, LCI said Goodenough had resigned “due to ill health.” He will be temporarily succeeded by Ron Hobbs, a director of LCI since 1992; a permanent chairman will be named “as soon as is practicable.”

Though the statement made no mention of it, the Guardian, a British newspaper, reported today that Goodenough’s health troubles had been brought on by “a troublesome venture in Las Vegas (the Aladdin).” LCI now owns 40 percent of the Aladdin, and has experienced severe financial difficulty because of its large capital infusions into the financially under-performing property.

There was no official word this morning on whether Goodenough had been able to secure control of the Aladdin on his way out. Both the Sunday Telegraph of London and the Guardian have reported LCI will announce in its annual earnings report that it has taken a 90 percent stake in the Aladdin’s holding company. That report is expected to be released Tuesday morning.

That would require a deal to be struck with the property’s majority shareholder, the Sommer Trust, which now owns 57 percent of the Aladdin’s outstanding stock.

Through an Aladdin spokesman, Aladdin Chief Executive Richard Goeglein said he had no knowledge of such a deal. This morning, Jack Sommer, principal of the Sommer Trust, denied any deal had been signed. More about Semua Situs Slot Mpo

“I never signed any agreement to that effect, so I don’t know what they’re talking about,” Sommer said. “It’s just not so. If we had done so, we would have made that public.”

But sources indicate talks have been under way between Sommer and LCI for some time. In February, sources told the Las Vegas Sun that LCI was working on a deal with Sommer to convert its preferred shares into common shares, giving it control of the Aladdin.

LCI currently holds preferred stock valued at $166.4 million; Sommer’s preferred shares carry a value of $13.8 million. By comparison, the Aladdin’s common stock carries a value of negative $4.35 million because of accumulated deficits.

If the Sommer Trust agreed to a conversion, LCI would then attempt to sell off a majority stake of this stock to a third party. Talks have apparently been continuing between the two sides.

But Wall Street analysts are very skeptical whether LCI would be able to execute on the second part of that strategy — selling a majority stake to another party.

The reason is simple: the Aladdin’s equity has no value. And the property currently carries around $700 million in liabilities.

“You can move equity around any way you want,” said Andrew Zarnett, gaming analyst with Deutsche Banc Alex. Brown. “But owning 50 percent of nothing and owning 90 percent of nothing is still worth nothing.”

Jason Kroll, gaming analyst with Bear Stearns, also expressed skepticism that a third-party buyer could be found. He noted that “change of control” agreements would require any new owner to buy back the Aladdin’s $221.5 million in bonds at 81 cents on the dollar — adding nearly $180 million to a potential pricetag. The bank debt, totaling more than $400 million, would also probably have to be paid off as well, Kroll said.

“It would seem prohibitive for an outside party to consider taking control of the company, given the potential costs involved in having to satisfy the banks and bondholders,” Kroll said.

Zarnett said he believed “there’s no way” Park Place Entertainment Corp. of Las Vegas would be the company to buy the majority equity stake from LCI, as has been speculated.

“Park Place has been a frugal buyer of assets,” Zarnett said. “For them to step in and buy equity that’s already … leveraged nearly 10 times (annual cash flow) would be very imprudent, and something they’ve never, ever done or even considered doing.”

Tuesday is a critical date for the Aladdin for another reason. By day’s end, the Aladdin will be required to make an $8.8 million interest payment to its bankers.

The risk of bankruptcy is considered quite real by observers, as the property’s annual debt and lease payments total just under $75 million per year — and the Aladdin hasn’t been generating nearly enough cash flow to cover those payments.

Since the Aladdin’s cash flow isn’t enough to cover its debt payments, both LCI and Sommer are required under agreements with the Aladdin’s bankers to invest more cash into the property — up to $30 million per year if necessary. They were required to invest $8.7 million earlier this year, but haven’t done so to date. The two companies are continuing talks with the Aladdin’s banks to restructure the payment schedule on the Aladdin’s debt.

The Aladdin had only $9 million in available cash in early May, and posted just $8.3 million in cash flow for the first three months of 2001. The property was, however, able to make $9.4 million in interest and lease payments in June.

These payments won’t be easing up. In September, $10.3 million in bank and lease payments will come due. And when the Aladdin must begin paying cash interest on its bonds in 2003, its annual costs will escalate by nearly $30 million more.

“If they (the Aladdin) don’t make that payment (Tuesday), that’ll take them one step closer to restructuring,” Zarnett said.