Tropicana Casino Lands With Icahn Group for good?
When the big Tropicana Casino and Resort was put on the selling block at the beginning of 2008, most people expected it to fetch a cool $1 billion. But with the faltering economy a group of investors that includes Carl Icahn made an offer to trade $200 million of debt they are previously purchased in a trade for the ownership of the casino giant. And it worked.
Jon Weinert, a Spectrum Gaming Group casino analyst said that this super low price for one of Atlantic City’s big hitters in the casino arena is a sure sign of very troubling times in the United States. He stated that the Tropicana is a very attractive asset and will be in good standing to continue to thrive when the nation’s economy makes a recovery.
The Icahn group was the single bidder for the Tropicana, which is one of the largest casinos in Atlantic City. The attorney overseeing the conservator who has been monitoring the process of the sale said that the group of investors could expect to be given the green light as the new owners very soon by a judge specializing in bankruptcy.
The group would next need to seek temporary approval from the casino regulators in New Jersey and apply for a license to run the casino resort. This process could take a full year to complete. The new owners of the Tropicana would apply for interim authorization, a process that lasts nine months. This process could be extended for three additional months beyond that, according to a spokesman for the New Jersey Casino Control Commission.
These investors, which include Icahn, have a mortgage of $1.4 on the casino resort, which helped them to make a bid that no one could match. The group has agreed to lay down a minimum offer in bankruptcy court and if no one goes over it they get the casino.
The group of investors entered an offer of two hundred million of debt that they owed for the Tropicana. This made it a requirement for other interested people to offer more than that amount in either cash or as securities. This was something that no one was interested in or willing to do. An attorney for the investors group did not want to make a comment regarding this.
The Tropicana lost their license to operate the casino in late 2007, making this sale an absolute necessity. A retired New Jersey state Supreme Court Justice by the name of Gary Stein was appointed to oversee the Tropicana until a suitable buyer was found.
Regulators around the country and various casino executives had initially expected the big casino resort to bring a price in $1 billion range. Some offers were close as one group of investors from New York offered $950 million and Colony Capital LLC who owns two Atlantic City casinos, offered $850 million.
Stein said no to both of those offers, stating that they were not high enough and he questioned the financing that backed up the offers, so the process started over. A few months later $700 million in notes and cash or a flat $575 million was offered by a Baltimore company. This offer was withdrawn due to the worsening economy. This is when the investor group with Icahn included, stepped in.
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