Investors offer $200 million for Tropicana Atlantic City

Tuesday, March 31, 2009 | 1:24 p.m.

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A group of investors lead by former Sands Hotel Casino Atlantic City owner Carl Icahn is offering $200 million for the Tropicana Atlantic City.

Former New Jersey Supreme Court judge Gary Stein, the state trustee and conservator for the Tropicana Atlantic City, announced yesterday that it had reached an agreement on the terms of purchase that sets $200 million as the minimum bid for a bankruptcy auction of the casino.

Earlier this month, the New Jersey Gaming Control Commission set April 30 as the latest sale date in a series of extensions since December 2007.

The $200 million is regarded as the opening bid and is expected to generate higher offers from would-be buyers. If no higher offer is made, Icahn and his group would acquire the casino.

Final paperwork setting the minimum bid was filed electronically at 11:30 p.m. Monday, just making the deadline the commission set to indentify a bidder. The next step will be for the commission to vote on the agreement of sale during its April 15 meeting. The approval would allow Stein to take the Tropicana into bankruptcy court in New Jersey for an auction in the coming weeks.

“It is my expectation that this stalking horse bid will generate substantial interest from multiple bidders, leading to a robust auction that achieves the highest price possible in light of current conditions in the gaming industry,” Stein said in a statement. “As we have stated previously, we fully expect that the Tropicana will continue to operate in a smooth and uninterrupted manner during the sale process and the transition to new owners.”

The $200 million is a sign of the toll the recession has taken on the casino industry. 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.

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.

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.

Under Tropicana Entertainment’s approved reorganization plan, the casino company could emerge out of Chapter 11 later this month. The plans cancel all the equity interests of former owner Yung, who creditors largely blamed for the company’s decline.