The California development company that sought to buy Trump Plaza Hotel and Casino for $20 million announced Friday night that the sale has been delayed, creating even more uncertainty for Atlantic City’s poorest-performing property.
“We are disappointed to announce that our acquisition of the Trump Plaza cannot be completed as planned at this time because Trump Entertainment has been unable to obtain a release of the mortgage held by their senior secured lender,” the Meruelo Group said in a statement.
Trump’s senior lender is billionaire investor Carl Icahn, who holds the mortgage on Trump Plaza even though he lost a highly publicized bankruptcy battle in 2010 for control of the Trump casinos. The bankruptcy judge ruled in favor of corporate bondholders supported by Donald Trump.
Although Trump Plaza’s sale has been delayed, the Meruelo Group said it has secured an option from the casino’s parent company, Trump Entertainment Resorts Inc., to purchase the property later this year if the mortgage can be satisfied.
“We remain fully committed to acquiring the Plaza, and are focused on becoming a part of the Atlantic City community, and being a part of the renewal of this great property for the benefit of the Plaza’s employees and customers, and the greater community,” Meruelo said.
Trump spokesman Brian Cahill confirmed Meruelo’s statement but had no other immediate comment Friday night.
Despite the delay, Meruelo said it was hopeful of “a successful resolution to this matter culminating in our acquisition of this property.” The company said it would have no further comment until the sale is completed.
When the sale was announced in February, the Meruelo Group said it wanted to close the deal by May 31. It noted then that the sale was pending approval by Icahn’s investment firm.
Reports began circulating in the past two weeks that Icahn was reluctant to approve the deal because he thought the $20 million price tag was too low. Vincent Intrieri, senior managing director of Icahn Partners, did not return calls seeking comment.
The proposed $20 million purchase price would be the lowest ever paid for an Atlantic City casino. The city’s six-year casino slump has sent real estate prices plummeting. Other bargain deals included Resorts Casino Hotel’s $31.5 million sale in 2010 and the $38 million purchase price for the former Trump Marina Hotel Casino in 2011. The Atlantic Club Casino Hotel is in the midst of being sold to the parent company of online global gambling giant PokerStars for an undisclosed price.
In Trump Plaza’s case, the Meruelo Group was seen as a savior for the troubled property. Trump Plaza finished dead last in 2012 in gambling revenue among Atlantic City’s dozen casinos, grossing just $102.5 million. Its gambling revenue plunged 25 percent overall for the year, including 46 percent at the table games.
Xavier Gutierrez, the Meruelo Group’s president, told The Press of Atlantic City in February that the company planned to invest more than $100 million to refurbish and rebrand the aging casino. Under Meruelo’s ownership, Donald Trump’s name would have been wiped off the casino and a new theme would have been selected.
The Meruelo Group, of Downey, Calif., is a diversified holding and investment company. It has holdings in banking and financial services, restaurants, hotel-casinos, construction and engineering, real estate and private equity. It owns the Grand Sierra Resort casino in Reno, Nev.
The company is headed by Alex Meruelo, a Cuban-American who began his career in his father’s tuxedo business, according to his online biography. In 1985, he opened the first of what became his La Pizza Loca pizza chain in Southern California. He expanded his business when he founded the Meruelo Group. In 2011, he acquired KWHY-TV, a Spanish-language television station based in Los Angeles.
Meruelo Group was anxious to buy Trump Plaza because of its prime location in the center of the Boardwalk casino zone, at the foot of the Atlantic City Expressway entrance.
Next door to Trump Plaza is Boardwalk Hall, the city's main sports and concerts venue. Having Boardwalk Hall as a neighbor gives the Plaza the opportunity to attract sports fans and concertgoers after the shows.
Opened in May 1984, the Plaza cost $210 million to build. These days, it is stuck with outdated architecture and awaits a major facelift. Not much has happened since the casino floor was remodeled in 2006.
The casino has not undergone a major expansion since 1996. The 500-room Trump World’s Fair Casino was integrated into the property then, but the World’s Fair became a financial flop and was closed in October 1999, then demolished.
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