Park Place competing with Icahn for second Atlantic City casino

Thursday, Aug. 24, 2000 | 10:43 a.m.

SUN STAFF AND WIRE REPORTS

ATLANTIC CITY -- Billionaire financier Carl Icahn has competition in his effort to acquire the Claridge Casino Hotel.

Park Place Entertainment Corp. of Las Vegas, defeated last month by Icahn in a bankruptcy battle for the neighboring Sands Casino Hotel in Atlantic City, has offered $77.08 million cash for the Claridge, the Press of Atlantic City reported today.

Black Hawk Gaming & Development Co., a small casino operator in Colorado, has bid $78 million, the newspaper said. Black Hawk is also seeking a Nevada gaming license to buy a Reno casino.

During a conference call Wednesday, U.S. Bankruptcy Judge Judith Wizmur agreed to postpone a hearing next month at which Claridge planned to seek approval for its reorganization plan. She scheduled a Sept. 6 hearing to determine how the reorganization will proceed.

Icahn's bankruptcy lawyer, Edward Weisfelner, questioned the "timing and motivation" of Park Place's bid. In the conference call, he suggested that the Claridge be allowed to emerge from bankruptcy under its current plan, with the provision that it be auctioned in perhaps 6 to 8 months.

Casino management would stay in place and would not be influenced by Icahn during that time, Weisfelner said. He said this would allow bondholders and other creditors to be paid more quickly.

Icahn is the largest single bondholder, owning about 40 percent of the bonds. If approved, the Claridge's "joint plan of ownership" would put control of the business into Icahn's hands.

The reorganization plan calls for the casino's landlord and the partnership that owns the enterprise to transfer the Claridge's assets to a reorganized Claridge.

Under the casino's unusual corporate structure, the limited partnership owns all of the property's non-casino assets except a parking garage. It leases them to the Claridge Corp.'s operating subsidiary. The subsidiary, in turn, owns the slot machines and table games and is responsible for making debt payments to the bondholders.

According to the reorganization plan, the holders of the Claridge's $85 million in first mortgage notes would be given 100 percent of the equity in the new Claridge.

Park Place, led by Chief Executive Arthur Goldberg, is a gaming industry behemoth with casinos around the nation and famed Las Vegas resorts like the Flamingo Hilton, Bally's, Paris and Caesars Palace. For the quarter ended June 30, Park Place reported a profit of $56 million on revenue of $1.25 billion.

Icahn has been expanding his Las Vegas holdings and now controls the Stratosphere and two Arizona Charlie's hotel-casinos in Las Vegas. The Stratosphere alone generated a profit of $1.2 million on revenue of $32 million in the second quarter.

Black Hawk Gaming & Development, based in Black Hawk, Colo., is small in comparison to Park Place and the billionaire Icahn's casino operations. Its second quarter revenue was $22.1 million, producing a profit of $1.5 million.

Black Hawk owns the Gilpin Hotel Casino and has a majority interest in the Lodge Casino, both in Black Hawk. Black Hawk agreed in January to buy the Gold Dust West Casino & Motor Lodge, a locals' casino-motel in Reno, for $26.5 million and is now seeking a Nevada gaming license.