Tropicana Atlantic City sold to Carl Icahn-led group

By Amanda Finnegan

Friday, June 12, 2009 | 1:30 p.m.

AP Photo/Mel Evans

Tropicana Atlantic City

A New Jersey bankruptcy court approved the sale of the Tropicana Atlantic City to a group of investors lead by Carl Icahn today.

Icahn and creditors will claim ownership of the hotel-casino in exchange for $200 million worth of debt in the Tropicana the group purchased at a heavy discount.

The bankrupt property was expected to retrieve $1 billion when it hit the market over a year and a half ago. The economic downturn and gaming revenue declines in Atlantic City drove the price down 80 percent.

The next step will for the new owners to obtain an interim license from the New Jersey Casino Control Commission. The commission will decide whether the Icahn and investors can own the Tropicana Atlantic City as part of Tropicana Entertainment or if they will need to form a separate company to operate the property.

The transaction is expected to be complete by the end of the year.

The Tropicana Atlantic City has been for sale since December 2007 after its former owner, William Yung, was determined as unqualified to run a casino in New Jersey. The commission voted not to renew Tropicana’s casino license, which was formerly held by Adamar of New Jersey. The state then asked trustee and conservator Retired Justice Gary Stein to find a potential buyer.

Tropicana Entertainment, which owns Tropicana Las Vegas and formerly owned Tropicana Atlantic City, filed for bankruptcy in May 2008 after it defaulted on nearly $2.7 billion in bonds. The company said without the New Jersey property, it couldn’t afford to pay its debt.

Baltimore-based Cordish Company emerged as the leading bidder last fall when the company offered $700 million to purchase the property. Negotiations later fell through.

In late March, Icahn and investors appeared as the stalking horse bidder for the bankruptcy auction, offering $200 million for the property. Another party would have had to offer more that $200 million to purchase.

Icahn once owned the Sands Hotel and Casino in Atlantic City but sold it in 2006 to Pinnacle Entertainment. The hotel-casino was later imploded.

The beachfront Tropicana Atlantic City is one of the largest hotel-casinos in the city with 2,100 rooms and more than 200,000 square feet of retail, dining and entertainment space.