Billionaire investor bids USD 200 million for ailing Atlantic City casino
Carl Icahn is making a play for a hotel-casino that is down on its luck.
Following months of anticipation, the billionaire and activist investor made a USD 200.0 million offer to acquire the Tropicana Casino and Resort in Atlantic City on Tuesday, demonstrating how poorly the gaming industry has fared over the last year amid the economic downturn. Year-earlier bids for the struggling casino were closer to USD 1.0 billion.
The casino had been operating under a court-appointed supervisor since being stripped of its casino license by the New Jersey Casino Control Commission in December 2007. A pricey USD 2.1 billion takeover that year, paid for in part with budget cuts, led Tropicana Entertainment to lose control of its Atlantic City property at a time the casino business was beginning to show the effects of a weak U.S. economy, which began as result of the subprime mortgage crisis.
Last year, Tropicana Entertainment filed for Chapter 11 bankruptcy protection to restructure and get the company’s debt under control. (See „Tropicana Hits Bottom.“)
Icahn’s low-ball offer Tuesday set the minimum bid price for the Tropicana in a bankruptcy-court auction expected to be authorized by state casino regulators within two weeks. If no other party bids higher than USD 200.0 million, Icahn will get the casino-hotel.
A New York-based developer had offered USD 950.0 million for the Tropicana last year, outbidding an USD 850.0 million offer by Colony Capital, which owns Atlantic City Hilton Casino and Resort as well as Resorts Atlantic City.
„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 Gary Stein, the retired state Supreme Court Justice. „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.“