Atlantic City Hilton Casino continues to seek buyer

Bradford Smith, a New Jersey gaming consultant and former chairman of the state Casino Control Commission, also thinks the Hilton’s future is bleak unless a new buyer revitalizes it. “It will take a lot of work,” Smith said. “It is a difficult situation.”
The Hilton has been unable to find a buyer since it went on the market months ago. Lenders led by the US National Bank Association put foreclosure proceedings on hold in January after reaching agreement with Hilton owner Colony Capital to sell the Boardwalk property.

The sale has been complicated by the recent decision by Hilton Hotels & Resorts to sever ties with the casino, meaning the Hilton brand will be stripped off the building. Hilton Hotels confirmed in June that it had ended a licensing agreement that allowed the casino to use the Hilton name. Hilton Hotels did not divulge the reason for the move other than to say that it wanted to “protect our name and identity.”

For the time being, the Hilton moniker is off the slot machines, but remains on the casino hotel and its table games. It will have to come off those eventually. Already, the Hilton has begun referring to itself as “ACH” — an acronym for Atlantic City Hilton — on its website, show tickets and promotional literature. Calls to the casino are answered with the greeting “ACH.”

When asked for clarification, casino spokeswoman Tina Belluscio said in an email that the Atlantic City Hilton Casino Resort remains the formal name until further notice. Any buyer would face the expensive task of rebranding the casino. It will cost millions just to take down the old Hilton signs — some have already been removed — and install new ones that have the casino’s new name.

“It is expensive to give a property a name change,” said Michael J. Viscount Jr., an attorney with Fox Rothschild in Atlantic City who has been involved in bankruptcy cases for casinos and other hospitality industries. “You have to change every pen, every piece of paper, every website. The signage is an astronomical expense. If they don’t change it, they would have to put a cover over it.”

Analysts point to the recent sale of two other money-losing Atlantic City casinos as a benchmark for the Hilton’s possible price tag.

Resorts Casino Hotel sold for us$ 31.5 million in December, while Trump Marina Hotel Casino fetched us$ 38 million when it was sold in May and rebranded as the Golden Nugget Atlantic City.

The Hilton was valued at us$ 513 million when it was purchased by Colony Capital in 2005 as part of a us$ 1.24 billion deal for four casinos in New Jersey, Mississippi and Indiana.
Even in the us$ 30 million price range, the Hilton’s buyer would be taking a huge gamble. The Hilton suffered an us$ 18.9 million operating loss last year and was us$ 7.3 million in the red through the first quarter this year, making it Atlantic City’s worst-performing casino.

The buyer also would be saddled with the Hilton’s financial liabilities. The Hilton is being shopped as a “stock sale,” meaning the financial obligations will go with the casino hotel — including the labor contracts, unfunded pension liabilities, payments to vendors, lawsuits, and any unpaid real estate taxes.

“It has to do with successor liability for the buyer,” Viscount said. “If you’re doing a stock sale, then, after the transaction is done, the old entity still exists and the liabilities go with it. The reason the seller wants to do a stock sale is because he wants to make a clean break and move on and never have to think about it again.”

The sale process has been conducted in secret by investment bank Houlihan Lokey on behalf of the lenders. Michael Coster, a senior vice president at Houlihan Lokey who is overseeing the sale, declined to comment.