ttorney Gilbert Brooks, representing Icahn and other secured lenders who hold a us$ 1.4 billion mortgage on the casino-hotel, says Icahn and others are willing to make an offer as a so-called stalking horse. That involves making a minimum offer in a bankruptcy court auction that other bidders can then exceed; if no one else bids, the stalking horse gets the property.
The state Casino Control Commission, which licenses and regulates the industry, had been expected to authorize a sale Wednesday. But because a potential offer from the lenders appeared close to materializing, the deadline was put off for a month. A bankruptcy auction likely will be authorized March 18.
The Tropicana has been overseen by a state-appointed conservator since December 2007, when its former owners were stripped of their casino license after nearly 1,000 layoffs led to problems with cleanliness, service and compliance with state gambling regulations.
The conservator, Gary Stein, a retired state Supreme Court justice, had tabbed Baltimore-based Cordish Co. as a potential buyer for the Tropicana in a bankruptcy court auction. But the two sides still have not reached a deal that would be acceptable to the senior lenders, who could block it in court. Stein attorney Sean Mack said the company’s chairman, David Cordish, remains interested in the Tropicana. Last year, Cordish offered $700 million for it, but that offer has been reduced because of the economic meltdown. "He’s still very interested and is still willing and considering increasing his offer," Mack said Wednesday.
The new amount Cordish is willing to pay for the casino hasn’t been disclosed. Brooks said if Icahn and other lenders including the Greenwich, Connecticut-based hedge fund Silver Point Capital LP do make a stalking-horse offer in a bankruptcy auction, they would welcome higher bids from Cordish or anyone else.
Later Wednesday, the casino commission was to hear a request from a lender seeking to foreclose on New Jersey’s first casino, the Resorts Atlantic City, which hasn’t made loan payments since October. Column Financial Inc., a commercial mortgage subsidiary of Credit Suisse, asked the commission last month to let it foreclose on the casino. Failing that, Column Financial wants the Colony Capital LLC affiliates that own the casino to hand over title to the property. Column would keep the casino open while searching for someone to run it.
Resorts was the first casino outside Las Vegas when it opened in May 1978. But it has an older clientele that spends and loses less money than younger crowds that prefer newer casinos such as the Borgata Hotel Casino & Spa. Resorts took in us$ 233.2 million in 2008. The only Atlantic City casino that did worse was Trump Marina Hotel Casino, which is being sold.
In contrast, the Borgata’s revenues were us$ 738.7 million. Atlantic City is struggling not only with the nationwide recession, which leaves gamblers with less money to risk, but also with competition from new slots parlors in Pennsylvania and New York. The casino commission said recently that 10 of Atlantic City’s 11 casinos were shedding jobs at an alarming pace.