Stupak pestering Icahn over Stratosphere

Gary Thompson

Thursday, Dec. 3, 1998 | 11:36 a.m.

Bob Stupak is miffed.

The former Stratosphere Corp. chairman believes stock in the newly reorganized company is dirt cheap and he wants to buy some of it.

But the stock wholesaler accumulating shares for Stratosphere's controlling shareholder, Carl Icahn, won't sell any to Stupak.

As a result, Stupak has filed a report "advising" the Securities & Exchange Commission that Knight Securities "is not acting to the benefit of the present (Stratosphere) shareholders that are willing to sell."

The biggest shareholder is Icahn, the New York billionaire who acquired control of Stratosphere by buying 89.6 percent of the company's first-mortgage bonds at discounted prices.

When Stratosphere couldn't pay interest on the $203 million of bonds, Icahn and other bondholders foreclosed on the property and filed a bankruptcy reorganization plan.

Under the plan, which became effective Oct. 14, all existing Stratosphere common stock was cancelled and 2,030,000 new shares were issued to holders of the notes.

Stupak says he received 1,005 shares of new Stratosphere stock in exchange for his notes and began attempting to buy additional stock from other former note holders.

"There's only 2 million shares of stock out and it was trading at $10 a share, and that means the whole company was worth only $20 million," Stupak says. "I know it's worth a lot more than that.

"I offered Knight Securities $15, $20, up to $25 a share. They were buying stock from other holders for $10 a share on Nov. 24 and as late as Tuesday bought other blocks for $13.125 and $18, but kept refusing my offers."

Knight Securities phone numbers in New York were not in service today, and its New Jersey number had been disconnected "at the customer's request," according to an operator.

Stupak says he's not interested in acquiring control of Stratosphere.

"The only thing I want to do is buy stock. It's a good investment, a super good investment. I'd like to have 10,000 or 20,000 more shares at $10 or $20 a share."

"Eventually it'll be a good property -- when they get good management," said Stupak, original developer of the Stratosphere tower who later lost control of it.

Stupak's SEC filing indicates he offered to participate in management of the new Stratosphere, an offer Icahn politely refused.

An attorney acting on Stupak's request wrote Icahn a letter asking that the financier consider adding Stupak to the Stratosphere board of directors.

"His previous 22 years of experience operating in that very special location would make him a unique and valuable asset to the company," the letter says.

"Do not judge Mr. Stupak based solely upon what you read or hear about him," the letter cautions. "There is no substitute for a direct meeting."

While the thought of a face-to-face meeting between Stupak and Icahn might boggle one's mind, unfortunately it hasn't occurred.