ATLANTIC CITY - Negotiators in the sale of Tropicana Casino and Resort have finally completed the proposed purchase agreement that could allow a group of lenders headed by billionaire financier Carl C. Icahn to buy the property for the bargain-basement price of $200 million.
The 98-page document is now in the hands of New Jersey gaming regulators, who are expected to approve it Wednesday and also authorize Tropicana to be sold off in a bankruptcy auction in the coming weeks.
A copy of the sale agreement was released Thursday by the state Casino Control Commission, but some related documents are not being disclosed or have been redacted to conceal key details. One exhibit outlining Tropicana's capital budget for 2009 has all of the figures blacked out. Also being withheld are so-called "disclosure letters" that contain proprietary financial, operating and marketing information.
Frustrated with delays and missed deadlines in Tropicana's arduous sale, gaming regulators have been putting pressure on attorneys to complete the purchase agreement so it would be ready for final approval at the commission's board meeting Wednesday.
"I think anyone who's followed this case since the licensing hearing at the end of 2007 can recognize that this will certainly be a significant step," commission spokesman Daniel Heneghan said.
Tropicana has been in limbo ever since its former owners were stripped of their New Jersey gaming license in December 2007 following mass layoffs, regulatory violations and customer complaints of unsanitary conditions ranging from filthy rooms to overflowing toilets.
While previous attempts to sell Tropicana failed, a group of lenders headed by Icahn has agreed to assume the role of stalking horse, or leading bidder, for the minimum price of $200 million. Icahn and his fellow lenders are the clear front-runners because they already hold a $1.4 billion mortgage on Tropicana and can use that debt to increase their offer if a bidding war breaks out.
The Icahn group is in position to pocket a casino that was originally expected to fetch $1 billion or more when it went on the market in late 2007. Since then, the recession, the global credit crisis and Tropicana's deteriorating financial performance have drastically reduced the casino's value.
However, other potential buyers will have an opportunity to make higher bids in the bankruptcy auction. In Icahn, they will find a rival who has experience in buying distressed casinos. Icahn bought the now-defunct Sands Casino Hotel in a 2000 bankruptcy sale for the dirt-cheap price of $65 million and sold it six years later for $270 million.
Exactly when and where Tropicana's bankruptcy auction will unfold have not yet been divulged. Bidding procedures written by officials overseeing the sale show that potential buyers will be prescreened to make sure they are "financially qualified."
Tropicana's sprawling property includes 140,000 square feet of gaming space, 2,129 hotel rooms and a mall-like retail and entertainment center called The Quarter. Built in 2004, The Quarter alone cost $285 million - higher than the Icahn group's proposed purchase price for the entire Tropicana complex.
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