Early last week, Atlantic City’s Taj Mahal casino seemed to have gotten a reprieve after winning a key concession in bankruptcy court and is no longer planning on a November 13 closing date. But later in the week, Carl Icahn, who was planning to exchange debt for equity in the company, said it’s a little to late and without state aid, the property “will almost certainly close.”
Officials with Trump Entertainment Resorts said they have withdrawn their public notification of the November 13 date for a closing. If the casino were planning to close on that date, the company would have to begin the regulatory approval process for the shut down almost immediately.
Instead—in a sign that the casino is sticking around for at least awhile—the casino announced a November 28 concert by the band Culture Club will be held as scheduled at the Taj. But Icahn couldn’t give any encouragement after that date.
“One overriding fact is perfectly clear: The Taj is quickly running out of money and will almost certainly close,” Icahn told the AP. “Reprehensibly, the union, instead of working with, and trying to help, the company to keep the Taj alive, is instead doing everything to destroy the possibility of saving the jobs of over 3,000 employees.”
Bankruptcy Judge Kevin Gross ruled two weeks ago that the casino could break its contract with Local 54 of UNITE-HERE, the city’s largest casino workers union. Trump Entertainment sought to stop making pension plans payments to the union—replacing them with a 401K plan for workers—and also to stop healthcare benefits. The casino wants to replace the health benefits with a $2,000 stipend so that workers can seek healthcare through the federal Affordable Healthcare Act.
The plan was bitterly opposed by the union, but in his ruling, Gross said he felt the union had not bargained in good faith to help save the beleaguered casino from closing.
Trump Entertainment says the changes affect about 1,100 workers at the casino and will save the company about $14.6 million annually, a figure they said they needed to cut to keep the casino viable.
The union, which planned to picket the casino, but has not called for a strike, says the cuts translate into a 35-percent pay cut for workers.
And as Icahn pointed out, the prospects are not good. Officially, the company has only said that the casino will stay open through November and has not ruled out closing by the end of the year.
Trump Entertainment made the deal with Icahn to swap about $286 million in debt for his ownership of the casino. Icahn would then invest about $100 million into the property.
Icahn, however, wanted the union concessions plus substantial tax cuts and public money—as much as $175 million—to go forward with the plan. While the union concessions are now in place thanks to the bankruptcy court, state and city officials have made it clear they will not be giving the casino the other concessions.
“As of now we don’t have any plan to close the Taj, but that could change next month,” Robert Griffin, CEO of Trump Entertainment, told the Associated Press. “We still need our plan to be approved, and we need assistance from the state with no assurance we’re going to get it. We can’t say we’re not going to close the Taj before the end of the year, but we can say it won’t close in November.”
Trump officials said the company is working with state and local officials on obtaining the public aid.
The deal faces a formidable opponent, however, in New Jersey State Senate President Stephen Sweeney.
Sweeney, a union leader, has repeatedly said he is against any state aid to the casino and has engaged in a war of words with Icahn, who he accuses of trying to strip union benefits from both Taj Mahal workers and workers at Icahn’s Tropicana casino in the resort.
“I won’t allow Icahn to use any state grants, tax breaks, subsidies to help underwrite an attempt to take away rights and benefits of workers,” Sweeney tweeted last week.
Charles Wowkanech, president of the New Jersey State AFL-CIO, has also called on union supporters to boycott booking events at Icahn-owned properties in Atlantic City.
Trump Entertainment meanwhile has accused Local 54 of violating a bankruptcy-court rules by contacting Taj Mahal’s convention clients and asking then to move their functions to other city venues. The company has petitioned the court to have the union re-contact potential Taj customers and say that any initial communications were misleading and in violation of court rules.
Union officials deny the charge and filed a response saying that legally, they have the right to contact potential customers about union concerns, among other arguments.
Union officials also criticized Gross’ decision. Saying it could lead to the loss of benefits for casino workers throughout the city.
“No other property owner is going to want to pay several dollars more an hour than Icahn is paying at the Taj,” said Ben Begleiter, spokesman for Local 54.
Icahn said he’s sorry he even agreed to the deal, saying he “walked into a hornet’s nest here.”
“Frankly, several of my advisers have told me that if the city and the state did not come up with the money, they’d be doing me a large favor,” Icahn said. “Even if we get the concessions from the city and the state, we’re going to lose a lot of money. Everybody thinks I’m trying very hard to do this. I’m not.”