Majestic Research

Reuters

Court approves N.J. Tropicana sale to Icahn group

By Deepa Seetharaman
Published: June 21, 2009

NEW YORK, June 12 (Reuters) - A New Jersey bankruptcy court approved the sale of Tropicana Atlantic City Casino and Resort to its pre-bankruptcy lenders, including financier Carl Icahn, for $200 million, Tropicana Entertainment [TRPET.UL] said in a statement.

Tropicana filed for bankruptcy protection in May 2008. It also owns the Tropicana Casino & Resort on the Las Vegas strip. In May the company said that it would emerge from bankruptcy, in part due to $150 million in exit financing from Icahn.

U.S. Bankruptcy Court in Camden, New Jersey, approved the sale of Tropicana’s Atlantic City casino in exchange for the lenders canceling $200 million of their secured debt, according to the statement.

Icahn and the lenders have filed for regulatory clearance from the New Jersey Casino Control Commission and the deal is expected to take five to six months to close, the casino company said. Icahn was not available for comment.

Revenues for Atlantic City’s 11 casinos have been plunging for three years, hurt by regional competition and weak consumer spending. The New Jersey Casino Control Commission released data on Thursday that showed casino revenues for the month of May dropped more than 15 percent from a year earlier.

In particular, the Tropicana saw a 17.4 percent drop in revenue in May compared with a year ago, the data showed.

The commission appointed a conservator to oversee the Atlantic City casino in December of 2007 after voting not to renew its license. The conservator came close to selling the Tropicana to real estate developer Cordish Co last year for $700 million, but the deal fell apart as the economy soured.

The court had approved plans for an auction, but there were no bidders other than the Icahn group for the property.

“Clearly values of casino properties have come down dramatically over the last year or two because of the lack of availability of credit and because of the fact that a lot of the markets, particularly Atlantic City, is shrinking,” said Majestic Research analyst Matt Jacob.

"There’s not a lot of credit out there and not a lot of companies or investors willing to throw some money at the Tropicana,” Jacob said.

Tropicana Entertainment, which filed for bankruptcy last year, was created by hotel and casino investor Columbia Sussex Corp. when it bought rival Aztar Corp for $1.9 billion in 2006.

The case is in re: Tropicana Casino and Resort, U.S. Bankruptcy Court, District of New Jersey, No. 09-20711.