Icahn might buy more struggling casinos

Angie Wagner

Monday, April 17, 2000 | 10:43 a.m.

Showing off the construction of a new tower at the Stratosphere Tower hotel-casino in Las Vegas Friday, investor Carl Icahn said he might buy even more casinos in Las Vegas, especially if the industry continues to overbuild.

"It's a very good business," Icahn told the Associated Press. "It just depends what comes along. There's no question that I like to buy things that are bargains."

Icahn took over the bankrupt Stratosphere and the neighborhood casino Arizona Charlie's in 1998.

The New York billionaire purchased a controlling interest in the bonds of the Stratosphere and later converted that into an equity position. He gained control of Arizona Charlie's after Bruce Becker failed to get a loan to get the resort out of bankruptcy protection.

Icahn announced expansion plans for the Stratosphere, but problems with permits delayed construction. On Friday, Icahn said construction would resume and a new 1,002-room tower is set to open in August 2001. Currently the hotel has 1,440 rooms.

Icahn is spending $65 million on the improvements, which include a 67,000-square-foot pool and recreation area, private cabanas and two spas.

The 64-year-old New York billionaire said 1,000 more rooms could be added if the casino does well.

While the Stratosphere's distinctive 1,149-foot tower -- the tallest free-standing observation tower in the country -- should be a lure for tourists -- the resort lies just north of the famous Strip and blocks from downtown Las Vegas on the edge of a crime-ridden neighborhood.

"There's no question that we're not in a perfect location, but there's no question we can give a lot of value," he said.

"The Stratosphere, I think, will be competitive, (but) I don't think on the highest level."

Icahn predicts a "shakeout" in the gambling industry, saying that Las Vegas casinos already are over capacity and the city could soon be overbuilt.

"The mistake I think is that you lose sight of what you're buying. I like the casino business, if you don't borrow too much to do it."

Icahn has a reputation for investing in undervalued properties, making immediate operational changes and selling out after turning quick profits. He also acquired Sunrise Suites in Las Vegas and has made successful power plays for Marvel Entertainment, TWA and Donald Trump's Taj Mahal casino resort.

On Monday, Icahn said he had reached an agreement with Nabisco Group Holdings Corp. that will allow him to see the company's books and solicit partners for his $4.7-billion takeover offer.

But Icahn, worth an estimated $4.2 billion, said he doesn't always sell out. He said he has owned some properties for years.

"I like to buy things cheaply, not necessarily to get ride of them. I've made some really good profits."