The latest potential savior for Atlantic City’s Trump Taj Mahal casino is one many had been hoping would step in—billionaire Carl Icahn.
According to a report in the New York Post—which quoted unidentified sources—Icahn is considering investing $100 million into the struggling casino, but would first want major concessions from the city’s casino unions, mainly Local 54 of UNITE HERE, the union that covers most of the hotel and F&B workers.
Those concessions include a loss of health benefits for many worker as well as replacing pension benefits with 401Ks. Local 54 officials have said they will not agree to those terms.
According to the Post, however, Icahn would not move without the concessions.
The casino is owned by Trump Entertainment Resorts, which filed for bankruptcy earlier this month and has already closed its other Atlantic City casino Trump Plaza. The company is trying to restructure by October 3. Icahn is the company’s principal debtor—owning the mortgages on both Trump Plaza and the Taj Mahal—and is owed about $286 million.
Icahn has agreed that he would exchange his $286 million in debt for equity if the deal comes together, the Post reported.
The company’s current owners—a group of hedge funds led by Avenue Capital—bought the company out of another bankruptcy in 2009, beating out a rival bid from Icahn.
According to the Post, the company is no longer interested in investing in the casino and is seeking to stop health care benefits to employees making less than $30,000. The group wants those employees to seek insurance through the Affordable Healthcare Act.
The company estimates it pays about $10,000 a year per employee for health insurance. The group would rather pay a $2,000 a year penalty for not offering health insurance under the act, the Post reported.
The group also wants to end pension benefits for employees in favor of a 401K plan.
Union officials, however, have questioned just how much those moves would save the company considering it has listed liabilities of $100 million to $500 million.
Still, if Icahn is to move, he wants similar concessions, the Post said.
If a solution isn’t found, the company plans to close the Taj Mahal in November. That would be the fifth Atlantic City casino to close this year, affecting more than 13,000 jobs in total.
Icahn did not comment on the report.
Icahn already owns Atlantic City’s Tropicana Casino Resort where he did manage to move employees out of a pension plan to a 401K plan. Icahn also has an ongoing feud with Local 54 and faces contract negotiations by the end of the year at the Tropicana.
Donald Trump has also been reported to be interested in saving the casino and re-emerging as a player in the company that still bears his name. Trump currently has less than a 10 percent stake in Trump Entertainment, but has said he is looking at the Taj and may move if the price is right
All in all, it’s a lot of ifs.
Meanwhile, Trump Entertainment has asked the bankruptcy court to allow it to sell off its assets including gambling equipment and furniture from the now-closed Trump Plaza. Lawyers for the company say it needs the cash for the bankruptcy proceedings and wants to avoid the expense of maintaining and storing the equipment.
Trump Entertainment CEO Bob Griffin said the proposed sale includes older slot machines from Trump Plaza, but did not specify how many would be sold.
Trump Plaza has 56 table games and just under 1,600 slot machines according to state records. It is seeking to sell “gaming equipment, equipment, furniture, supplies, fixtures, and other miscellaneous personal property.”
The company filed a motion for the sale, but a decision from the court has not been announced.
There is no question, however, that Trump Entertainment is having trouble with creditors. The company that maintains the Taj Mahal’s fire suppression sprinklers has filed a motion with court to end its contract at the casino saying it is owed more than $250,000.
Ultimate Gaming, which was the casino’s online gambling partner, has also ended its relationship with the casino and shut down its sites in New Jersey. The company says it is owed $1.5 million by the Taj in online revenue.
Meanwhile, Betfair continues to operate its online site despite the fact that its casino partner Trump Plaza has closed. The state gave Betfair about 90 days to find another partner. There has been speculation that it would join with the Taj Mahal as a casino partner, but that now seems unlikely and the site may also close.
Revel Auction Delayed
The fate of another of Atlantic City’s closed casinos—the Revel casino—is also still up in the air as a bankruptcy auction for the property was closed last week without naming a buyer and will resume September 30.
Bidders for the casino gathered in New York last week, but no decision on the auction was made and the auction was extended without any bids actually being made.
Florida-based developer Glenn Straub has made the only announced qualified bid of $90 million for the property, which cost $2.4 billion to build. But Stuart Moskovitz, Straub’s attorney told the Press of Atlantic City that no movement on the auction was made at the session.
“Absolutely nothing was done today,” he said.
Instead, Revel’s lawyers held closed-door discussion on offers for the property even though the bid deadline has passed. Moskovitz said that “tainted” the process.
“There are serious concerns about what’s taking place,” he said.
Straub also complained about the lack of progress. He told the paper that extending the auction was a tactic to increase billable hours for Revel’s legal team.
“It just gives you a dirty feeling, like you want to take a shower,” he said.
However, Bankruptcy judge Gloria Burns had previously advised attorneys to close the auction before the start of Rosh Hashanah, which started at sundown of the day the auction was held. Revel attorneys said they had followed the court’s procedures and called any allegation of wrongdoing unfounded.
What is unclear, however, is exactly how many bids have been made on the property, which was not disclosed after the first auction session. Moskovitz told the Associated Press before the session that he had been advised that multiple other offers for the casino had been made.
Other reports say at least two other offers were made at the deadline for bids. Reuters, citing unidentified sources, reported that the bids came from a party involved with casino gaming outside New Jersey and a real estate developer, but did not name them.
One previous bid, from Miami-based developer Richard Meruelo, has reportedly been deemed unqualified. It’s not clear if Meruelo has refined his offer and is one of the last-minute bidders.
There have also been moves by companies operating within Revel to stay open. The owners of a successful nightclub on the property have petitioned the court to allow it to stay open and now the Garces Group—operators of four restaurants at the site run by Philadelphia chef Jose Garces—has also asked the court to be allowed to continue to operate if the casino is sold.
Straub said further delays could cause him to back away and continues to offer a diverse and somewhat eclectic vision for what he hopes to build in Atlantic City.
Straub, who is looking to acquire more land in the resort, has said he envisions a casino still operating at the property—though through a casino management company—major sports and entertainment venues and now a university and think tank at the site.
Straub told Reuters he wants to use the site to help end world hunger, cancer, and resolve other pressing issues like nuclear waste storage. He envisions adding a second tower to the site as was part of the original plans for the property.
Straub did take some heat, however, for saying his ideal student is “free, white and over 21,” meaning they have no financial obligations. But Atlantic City, a city with a community consisting mostly of minorities, didn’t let that comment slide. Straub would be unwelcome should he win the bid.
He also envisions high-speed rail and ferry routes connecting the resort town to New York City, and an improved airport that could draw more vacationers.
Straub, in numerous interviews has certainly developed a reputation for shooting from the hip. He was even quoted several times calling Revel “a monstrosity” that he could live without.
It has left many in the city wondering what to make of him.
“When you start off with these kinds of ideas, to my eyes, it doesn’t give you a whole lot of confidence,” Democratic Assemblyman Vince Mazzeo, who represents Atlantic City told Reuters. “But this gentlemen, if he ends up buying it, he’s going to have to open those doors, which equates to employment.”
In other matters, the Revel Group LLC announced plans to terminate its license agreement for the branding of the property. The group says the brand was developed to highlight the property’s non-gaming amenities, but recent events—such as the casino and hotel being closed—have not lived up to the agreement.
Slot-machine manufacturer IGT has also asked Burns to order Revel to surrender gambling equipment stored at the property. IGT said the equipment collateralizes more than $3.6 million owed to the company. Burns said she would allow a $3 million “breakup fee” to Straub if the former Revel property is sold to another buyer. Some contend that has been Straub’s goal all along.
Also, ACR Energy Partners LLC said in a court filing that it “may be forced to commence its own bankruptcy case” if Revel doesn’t start pre-paying for the energy service it provides the property. The company has continued to provide power to the closed building, but received only small payments from Revel, it said.
The situation is considered serious as climate control in the building—which requires power—is needed to prevent mold and fungus in the interior.
And finally, court documents reveal the casino owes Atlantic City about $20 million in taxes. City officials have said they will pursue tax liens to get the payment.
