Tropicana's ex-owner says casino is worth $950 million in cash
By DONALD WITTKOWSKI
Staff Writer, 609-272-7258
Published: Friday, October 03, 2008
ATLANTIC CITY - Tropicana Casino and Resort's former owner says the troubled gaming hall is worth nearly $1 billion and will try to regain control of it as plans move ahead for a sale.Tropicana Entertainment LLC, which was stripped of its New Jersey gaming license last December, told the U.S. Bankruptcy Court on Thursday that the "minimum acceptable sale price" for the casino is $950 million in cash.That figure far exceeds the $700 million in cash and notes offered by the Cordish Co., a Baltimore real estate developer that has been designated as Tropicana's lead bidder in an upcoming bankruptcy auction. Cordish has also made a $575 million all-cash bid as an alternative.Although Cordish is now the front-runner, other would-be owners could buy the casino if they submit higher bids. Tropicana Entertainment has criticized Cordish's offer as a "fire-sale" price."Our creditors, our employees and our neighbors in Atlantic City cannot afford to have this marquee Atlantic City property purchased at a severely depressed price," Scott C. Butera, Tropicana Entertainment's chief executive officer, said in a statement.
Tropicana Entertainment lost its gaming license after a tumultuous reign of declining revenue, mass layoffs, regulatory violations and customer complaints of filthy rooms and overflowing toilets.However, the company says it will petition the New Jersey Casino Control Commission next week for permission to regain control of Tropicana. The company wants to integrate Tropicana with its other casino holdings and place it under the jurisdiction of the bankruptcy court. Butera said such a plan would allow Tropicana Entertainment to tap financing for upgrades to the aging Boardwalk gaming hall."Instead of engaging in a forced sale in the midst of an unprecedented financial crisis, we want to reinvigorate the management of the property, make significant investments in needed upgrades and assess the options," Butera said. "It just seems like the prudent thing to do for everyone involved."Tropicana Entertainment says its plan to regain control of the casino is a critical part of its corporate and financial restructuring in bankruptcy court. The court filing Thursday said that within 45 days of taking control, the company would submit detailed plans for improving casino operations and performance.No later than 60 days after the plan is submitted, the company would deliver its assessment on how to achieve the highest value for the casino. If the best option is a sale, then Tropicana Entertainment would consent to a bankruptcy auction that contemplates a price of at least $950 million, the company said.Tropicana Entertainment is trying to work out agreements with its creditors to pay off its debts. The loss of its gaming license sent the company reeling, ultimately leading to the removal of owner William J. Yung III as CEO and as a member of the board of directors. Yung was harshly criticized by the Casino Control Commission for his bare-bones operating philosophy and hundreds of layoffs that left the Tropicana casino understaffed and dirty.In Butera's statement Thursday, the company noted that the restructuring proposal will include "entirely new ownership" and a stronger financial framework to support its long-range business plans."(The) plan will provide that Mr. Yung's existing ownership interests be eliminated such that he will have no ownership role, involvement or any other interest whatsoever in the reorganized company," the statement said.The big question is whether the Casino Control Commission is convinced that Yung's removal as owner, combined with the company's other management and corporate restructuring moves, is enough to consider giving Tropicana Entertainment control of the casino again.Commission spokesman Daniel Heneghan would only say that the agency will review Tropicana Entertainment's application once it is received. He declined to comment further.E-mail Donald Wittkowski:DWittkowski@pressofac.com
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