ATLANTIC CITY — New Jersey gaming regulators Wednesday approved the sale of Tropicana Casino and Resort to billionaire investor Carl Icahn, ending a search for new ownership that began when the gaming hall lost its license more than two years ago.
In a 4-0 vote, coming after a daylong hearing, the state Casino Control Commission allowed Icahn to take control of Tropicana. Icahn’s company still must go through the requisite state background investigation and approval process for a gaming license.
“When the commission started the race to find a buyer for Tropicana, we anticipated a sprint. Instead, we got a marathon,” Vice Chair Sharon Anne Harrington said of the protracted transition to new ownership.
The Icahn-led Tropicana Entertainment Inc. will fold the Atlantic City property into its corporate umbrella of nine casinos in New Jersey, Nevada, Mississippi, Louisiana and Indiana.
Tropicana has languished ever since its former owner, Columbia Sussex Corp., was stripped of its gaming license in December 2007 following a troubled reign of declining revenue, mass layoffs and customer complaints of bedbugs, filthy rooms and overflowing toilets.
The casino had been under the control of a state-appointed conservator since then. In approving Icahn’s new ownership, the commission ended the conservatorship by Gary S. Stein, a retired New Jersey Supreme Court justice.
Efforts by Stein to sell the property were delayed by legal disputes, bankruptcy, the sluggish economy and the global credit crisis. Icahn, a corporate takeover specialist, finally emerged as the buyer in a bankruptcy auction last summer.
While attempts to find a buyer dragged on, Stein was criticized by some state lawmakers for his handling of the sale and the millions of dollars in professional fees racked up by his Hackensack law firm and his team of consultants.
“The road was not always smooth — more often bumpy and sometimes rock-strewn — but Justice Stein persevered through it all,” Harrington said while countering the criticism.
Icahn had to wait for regulatory approvals in the states where Tropicana Entertainment operates casinos before he finally got formal ownership of the Atlantic City gaming hall.
John E. Adams Jr., a deputy state attorney general representing the New Jersey Division of Gaming Enforcement, asserted that Tropicana’s “saga” is finally over.
“I think we’ve all waited for quite a length of time for this day to come,” Adams said.
Icahn, who did not attend the commission meeting, agreed to buy Tropicana for $200 million. The $200 million represented the amount of debt that Icahn and other lenders canceled on the nearly $1.4 billion mortgage they held on the casino hotel. The mortgage has since been converted into equity in the casino.
Speaking for the commission, Harrington characterized Icahn’s purchase of Tropicana as a positive development for the Atlantic City gaming market, now mired in a three-year revenue slump.
“Carl Icahn’s return to the business of gaming in New Jersey certainly brings ... signs of rejuvenation and optimism in the market,” she said.
Icahn once owned the now-defunct Sands Casino Hotel. He sold the Sands to Las Vegas-based Pinnacle Entertainment Inc. in 2006 for $270 million — more than four times the $65 million fire-sale price he paid to rescue it from bankruptcy in 2000. Pinnacle imploded the Sands in 2007 to make room for a proposed gaming resort that has since been abandoned.
Icahn’s quest for Atlantic City casinos continues. In addition to buying the Tropicana, he is currently involved in a bankruptcy battle against corporate bondholders aligned with Donald Trump for control of the three Trump Entertainment Resorts Inc. casinos.
In testimony before the commission, Icahn’s representatives expressed confidence in Tropicana’s future despite the weak economy and the intense competition Atlantic City is facing from surrounding casino states.
“I am a very strong believer in the long-term viability of Atlantic City,” Tropicana Entertainment Chief Executive Officer Scott C. Butera said. “I don’t see why this city can’t come back and continue to be one of the finest resort gaming destinations.”
However, Butera and other Tropicana executives said it is premature to say how much money the company would invest to upgrade the aging casino or how the property will be marketed under new ownership.
Tropicana is forecasting an increase in revenue and gross operating profits in the next three years, although by exactly how much is unknown. The company’s internal financial projections for 2010 to 2012 were redacted from a report written by the Division of Gaming Enforcement.
Instead of cleaning house, Icahn is keeping Tropicana’s current management team headed by President Mark Giannantonio.
Giannantonio praised Tropicana’s employees for helping to keep the casino hotel in business during a difficult two years without an owner. He promised Tropicana would “move the needle” forward now that it has the strength of new ownership.
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