Sands president testifies in support of Icahn plan for bankrupt casino

John Curran

Wednesday, June 21, 2000 | 8:11 a.m.

CAMDEN, N.J. - The president of the Sands Casino Hotel testified Tuesday in support of billionaire financier Carl Icahn's plan to pull it out of bankruptcy, calling it superior to a competing plan submitted by casino giant Park Place Entertainment Corp.

Al Luciani, the Sands' president and CEO, said Icahn's plan to invest $65 million in the property would help it recover quickly from the Chapter 11 bankruptcy case it has been mired in for more than two years.

Icahn's plan would give a better deal to the casino's existing bondholders, it has won the support of the Sands' unsecured creditors and employees favor it over the one submitted by Park Place, Luciani said.

The casino needs as big a cash investment as it can get to recover from its poor performance and stay competitive, especially given the impending addition of at least one casino in Atlantic City's marina district, Luciani said.

"The Sands has been a relatively underprivileged property in terms of capital improvements, and in this industry, capital improvements are very important," Luciani said.

His testimony came in the opening day of four days of confirmation hearings aimed at deciding who gets to rescue the Sands from bankruptcy.

The proceeding, which resumes Wednesday in U.S. Bankruptcy Court, will end with Judge Judith Wizmur deciding whether Icahn or Park Entertainment Corp. gets to take over the bankrupt casino.

Under Icahn's plan, he would get 46.3 percent of Sands' new stock and he would issue $110 million in new bonds in exchange for the $182.5 million in existing Sands bonds.

Park Place has proposed spending $40 million on the property in exchange for 57.5 percent of the new stock and giving bondholders $128 million in new bonds.

The unsecured creditors, who are 1,500 vendors owed $6.7 million when the Sands filed for bankruptcy, have voted in favor of the Icahn plan, which also is supported by Sands' management.

Icahn, who owns two Las Vegas casinos, is also making a play for the Claridge Casino Hotel, which is located next door to the Sands and also is currently under bankruptcy court protection.

Park Place owns 28 casinos - including three in Atlantic City - and could face scrutiny from regulators fearful that the company would exert undue economic concentration on vendors and the rest of the market should it get control of the Sands, too.

New Jersey's casino law originally banned any one company or individual from owning more than three casino licenses. It was amended in 1995, striking the license limit and instead giving regulators the authority to decide on a case-by-case basis whether the granting of a license would lead to undue economic concentration.

The Sands' vendors have expressed fears that under Park Place management, they would be forced to accept price concessions in order to do business with the company.