ATLANTIC CITY - New Jersey gaming regulators Wednesday approved a new ownership structure for Tropicana Casino and Resort that will place it under the control of billionaire financier Carl C. Icahn's gaming empire.
The Icahn-led Tropicana Entertainment Inc. plans to fold the Atlantic City property into its corporate umbrella of casinos in Nevada, Mississippi, Louisiana and Indiana.
The state Casino Control Commission stressed that Tropicana Entertainment Inc. is not the same company as the casino's former owner, Tropicana Entertainment LLC, which was stripped of its New Jersey gaming license nearly two years ago.
"It's a different company in name, structure and ownership. That's why we're doing this. We're not saying that the former owner can take it back," commission spokesman Daniel Heneghan said.
Icahn and other investors bought the privately owned Tropicana Entertainment LLC out of bankruptcy this year and plan to replace it with a public company called Tropicana Entertainment Inc.
The ownership change completes a dramatic restructuring of Tropicana Entertainment. The company was formerly controlled by controversial Kentucky businessman William J. Yung III and his Columbia Sussex Corp. hotel group. However, Yung was purged this year as the chief executive officer in Icahn's bankruptcy takeover.
Icahn's representatives said Yung has absolutely no influence or involvement in the reorganized company. When he was CEO, Yung was blamed for Tropicana Casino and Resort's downfall. He clashed with labor unions, violated gaming regulations and cut hundreds of jobs, leaving the casino understaffed and dirty. With Yung in charge, the commission revoked Tropicana Entertainment's license in December 2007.
"The biggest distinction is that the reorganized company has divorced itself from Mr. Yung. He is no longer part of the company," said Linda M. Kassekert, the commission's chair.
Tropicana was put up for sale after losing its license. In a separate bankruptcy deal, Icahn and other investors bought the casino in June for $200 million. Icahn sought the commission's approval to combine the Atlantic City gaming hall with his other Tropicana Entertainment casinos, arguing it would be much stronger under the corporate parent.
The timing of Tropicana Entertainment Inc. taking formal control of the casino depends on the speed of two bankruptcy cases, but it is expected to occur by year's end. The company still must emerge from Chapter 11 bankruptcy reorganization in Delaware. In addition, the sale of the Atlantic City casino is still working its way through bankruptcy court in New Jersey.
In the meantime, the casino will continue to operate under the supervision of a state-appointed conservator. Tropicana's current management team headed by President Mark Giannantonio will remain intact for the time being.
Giannantonio welcomed the Icahn-led investors as the new owners, saying the change will bring more stability to the casino after a turbulent reign.
"This is one step closer to the end of what had been a chaotic two years," he said.
For Icahn, it will be the second time he has owned an Atlantic City casino. His Tropicana purchase 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. He sold the Sands in 2006 for $270 million to gaming company Pinnacle Entertainment Inc., which imploded the casino the following year to make room for a proposed megaresort.
"No stranger to the New Jersey regulatory apparatus, Icahn has time and again demonstrated his independent approach to the casino business," the commission said in a statement. "Nothing even remotely suggests that he undertook this investment as an accommodation to Yung, with the prospect of eventually returning the asset to him, or allowing Yung to share in any profits."
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