Billionaire investor Carl Icahn has agreed to lend Trump Entertainment Resorts Inc. million to keep the company operating as it tries to emerge from bankruptcy.
The loan would help finance operations for Trump Entertainment through the end of January at the latest, according to papers filed Wednesday in the U.S. Bankruptcy Court in Wilmington, Delaware. The company is trying to complete a bankruptcy-exit plan by mid-January.
Icahn’s loan is subject to court approval.
The company is trying to keep its Atlantic City casino the Trump Taj Mahal from closing December 12, as has been announced.
Trump Entertainment has offered a plan where Icahn—the casino’s main lender—would convert $286 million in debt into equity in the company and invest $100 million into the struggling property. Icahn and Trump Entertainment have said the plan no longer is contingent on receiving concessions from the city and the state. The only remaining condition is that Local 54, the culinary union, drop the appeal of a judge’s order vacating the collective bargaining agreement that had been negotiated.
A bankruptcy judge in November ruled that the company could break its union contract and stop paying healthcare to about 1,100 union workers—out of the casino’s about 3.000 workers—and replace pension payments with a 401K plan. The company has said the moves will save it about $16 million a year.
Local 54 of Unite Here, the city’s main casino workers union has appealed the ruling and accused Icahn of union breaking. The union has held several protests against Icahn and the plan.
Trump Entertainment then countered with a plan to restore healthcare benefits and some pension payments. Workers would still lose some of their pension rights and make other concessions, such as surrendering paid break time. However, the company would restore health care for two years and contribute at a reduced rate to a retirement pay fund.
Talks with the union have been ongoing on the company’s latest proposal.
Meanwhile, Icahn penned an open letter to union leader Bob McDevitt in which he called the Taj Mahal “a bad investment” for him, but said he would go through with the plan if the union would simply drop its appeal and provide “labor peace.”
“Bob, as you know, this is a bad investment for me at this time, evidenced by the fact that no one else is willing to invest even a dime,” Icahn wrote. “I’m amazed that the union is unwilling to agree to a company proposal that restores two years of health care, provides a new pension, keeps the Taj open and saves 3,000 jobs—basically ALL of the things that you and Senator Sweeney have asked for—if you just withdraw the appeal and give us labor peace.”
New Jersey Senate President Stephen Sweeney has also been critical of Icahn and sided with the union in its battle.
“As you know, it’s impossible for me to invest in the Taj Mahal while the appeal is pending, and even if you win the appeal, all it will do is ensure that the Taj Mahal closes,” Icahn wrote to McDevitt. “Do you really want your legacy, and that of Local 54, to be defined by closing the Taj and putting 3,000 people out of work unnecessarily? There is no time left to negotiate, and that is why the company and I have put everything on the table.”
McDevitt has not commented on the letter.
Meanwhile, in other developments:
U.S. Bankruptcy Judge Kevin Gross on Wednesday set a hearing for December 4 to discuss whether Trump Entertainment Resorts’ Chapter 11 bankruptcy case should be converted into a Chapter 7 proceeding.
Chapter 11 bankruptcy allows a company to continue operating and shields it from creditors while it reorganizes its finances. Chapter 7 bankruptcy usually leads to a company’s liquidation and the distribution of assets to creditors.
Also, Trump Entertainment Resorts and Atlantic City have reached a deal to let the city collect unpaid taxes.
The deal—which has been approved by the bankruptcy court—will let the city conduct a tax sale of the company’s back tax debt of about $24 million. The deal preserves Trump Entertainment’s right to appeal the amount of its unpaid 2014 taxes.
The tax sale is scheduled for December 11, the day before the Taj Mahal is scheduled to close.
Also, the New York Post reports that Icahn is in talks with former magician and business turnaround expert Herbert L. Becker to head-up the Taj Mahal should a deal go through.
“If Carl and I come to terms, I can turn this around in a relatively quick fashion,” Becker told the Post. “I think the Taj can take the lead in turning Atlantic City around and Carl’s influence would be a great help. As goes the Taj Mahal, so goes Atlantic City.”
Finally, Donald Trump—who as only a small stake in Trump Entertainment—is seeking to recover $147,000 in rent he paid on a driveway leading to the now-closed Trump Plaza casino in Atlantic City.
According to a court filing, Trump says he paid $147,000 to the landlord of a driveway at the casino to avoid litigation and is seeking to get the money back from Trump Plaza Associates, part of Trump Entertainment.
