ATLANTIC CITY - Tropicana Entertainment LLC asserted Monday that it has severed all ties to its controversial former chief executive and he would have no involvement with the company if it is allowed to regain control of Tropicana Casino and Resort.
"Zero, nil, none whatsoever," Tropicana Entertainment bankruptcy attorney Marc Kieselstein said of William J. Yung III's relationship with the company.
Kieselstein's testimony came in a special New Jersey Casino Control Commission hearing on Tropicana's proposed ownership structure under its new buyer, billionaire financier Carl C. Icahn. Originally scheduled for two days, the hearing wrapped up Monday with testimony and the review of evidence. The commission will make its ruling at a later date.
Tropicana Entertainment is trying to re-enter the Atlantic City market 19 months after it was stripped of its New Jersey gaming license. At the time, it was owned by Yung, a Kentucky businessman, and his Columbia Sussex Corp. hotel group.
Yung was chiefly blamed for Tropicana's downfall. The commission focused on Yung's regulatory violations and hundreds of layoffs when it revoked Tropicana's license in December 2007 and put the property up for sale. Yung's failure to set up an independent audit committee to watch over the casino's finances resulted in a $750,000 fine - the largest penalty ever in New Jersey's 31-year history of legalized gambling.
Icahn and a group of lenders won bankruptcy court approval last month to purchase the Tropicana casino for $200 million. Icahn and the same group of lenders also bought Tropicana Entertainment earlier this year in a separate bankruptcy deal.
Under Icahn's ownership, Tropicana Entertainment wants to fold the Atlantic City property into its existing eight casinos in Nevada, Mississippi, Louisiana and Indiana. However, the commission could force the Icahn group to form a separate company to oversee the Atlantic City casino if it has any doubts that Yung has been purged from Tropicana Entertainment.
Company executives forcefully denied that Yung is still with the company in any capacity. They said he had been ousted as CEO and from the company's board of directors. Yung also signed an irrevocable agreement to surrender his ownership rights, they testified.
Scott C. Butera, Tropicana Entertainment's new chief executive officer, repeatedly answered "none whatsoever" in a series of questions asking whether Yung had any influence or involvement with the company.
Icahn's representatives said the new owners prefer to have Tropicana Entertainment qualified to run the casino because it would save money and allow the company to market Atlantic City with its other properties.
At the same time, they testified that the Icahn group would not have any less of a commitment to Atlantic City if the commission ordered Tropicana placed under the control of a new stand-alone company.
"Organizationally, it's more efficient to have them under one roof," Kenneth Shea, managing director of Icahn Capital LP, said of all of the Tropicana Entertainment casinos. "But it doesn't change our commitment to either entity."
For the time being, the Icahn group plans to proceed cautiously with its finances at Tropicana. The recession, growing unemployment and tight consumer spending may put a damper on any big-ticket upgrades to the property, Shea noted.
"We are taking a pretty conservative approach on capitalization going forward," he said.
Icahn and his fellow investors were able to acquire the Tropicana casino by buying $200 million of its debt for just 27 cents on the dollar, Shea said. The casino's value plummeted when the recession deepened and its revenue dropped sharply.
Icahn's purchase of Tropicana is strikingly similar to the way he bought the now-defunct Sands Casino Hotel in a 2000 bankruptcy sale for the dirt-cheap price of $65 million. In 2006, he sold the Sands for $270 million to gaming company Pinnacle Entertainment Inc., which imploded the casino the following year to make room for a proposed megaresort.
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