onetheless, the bid by the casino's secured lenders represented a breakthrough in the tortured effort to sell one of Atlantic City's largest casinos, which has been operating under a state-appointed conservator since being stripped of its casino license in December 2007.
Icahn's offer sets the minimum price for the Tropicana in a bankruptcy-court auction expected to be authorized by state casino regulators within two weeks. Other parties are free to submit higher bids. If no one else does, the Icahn group gets the casino-hotel for us$ 200 million.
"We are pleased the sale process is moving forward and that we have now reached agreement with the secured lender group on terms of a minimum credit bid for the Tropicana," said the conservator, retired state Supreme Court Justice Gary Stein. "It is my expectation that this stalking horse bid will generate substantial interest from multiple bidders, leading to a robust auction that achieves the highest price possible in light of current conditions in the gaming industry."
The Tropicana's former owners, an affiliate of Kentucky-based Columbia Sussex Corp., were stripped of their casino license in 2007 after less than a year in Atlantic City. The company engaged in massive layoffs, eliminating nearly 1,000 jobs.
That soon led to problems like filthy hotel rooms and bathrooms, cockroaches in rooms and restaurants, and long waits for slot jackpot payouts. The company also disregarded for six months a requirement that it have an independent audit committee. Interim management has since corrected those problems, and the Tropicana has continued to operate uninterrupted.
The loss of its license triggered a requirement that the casino be sold. But it went on the market at the worst possible time, just as the national economy was tanking and people had less disposable income to risk at the casino tables. Analysts and casino executives generally expected the Tropicana to sell for us$ 1 billion once it hit the market. It did get initial offers near that price.
A New York developer offered us$ 950 million, topping a us$ 850 million bid by Colony Capital, which owns the struggling Atlantic City Hilton Casino and Resort, and Resorts Atlantic City.
The Cordish Company, which helped redevelop Baltimore's Inner Harbor, offered $700 million last year, but may have dropped out of the bidding; it has since been replaced by the Icahn group as the lead bidder in a bankruptcy-court auction. Its officials have declined to say in recent weeks whether they remain interested. Company chairman David Cordish did not immediately return a message seeking comment Tuesday morning.