In addition to Stratosphere, AREP's casino operations include Arizona Charlie's Decatur and Arizona Charlie's Boulder, two off-Strip casino resorts in Las Vegas, and the Aquarius Casino Resort in Laughlin, NV. All told, AREP's gaming operations include 4,912 hotel rooms and 236,000 sf of casino space holding 4,887 slots and 122 table games. The portfolio also includes 17 acres of undeveloped land surrounding the Stratosphere.
AREP acquired 51% of the Stratosphere Casino Hotel & Tower in 2000 for $66 million and acquired the remainder in 2002 for $44.3 million. It acquired the Arizona Charlie's properties in May 2004 for $126 million. It acquired the Flamingo Laughlin in May 2006 for $170 million and then spent an additional $40 million turning it into Aquarius.
When Icahn announced the sale to Whitehall in spring 2007, he said it represented an opportunity to "take advantage of the current favorable market environment for gaming assets" to give AREP "in excess of $4 billion of liquidity to continue to invest in undervalued assets."
 Aquarius |
At the time the deal was first announced, the deal value was estimated at $1.3 billion -- plus or minus certain adjustments such as working capital -- and the gain was estimated at $1 billion. Today, Icahn says the deal value is $1.2 billion and that Icahn Enterprises gain is "in excess of $700 million."
An explanation of the difference was not provided, however; prior to the closing, American Casino & Entertainment Properties was required to repay, from funds provided by its parent company, American Entertainment Properties Corp. (also a subsidiary of AREP), the principal, interest, any prepayment penalty or premium and any other obligation owing under the terms of its 7.85% senior secured notes due 2012 and its senior secured credit facility. In addition, American Casino & Entertainment Properties repaid in full all amounts outstanding, and terminated all commitments, under its credit facility with Bear Stearns Corporate Lending Inc., as administrative agent, and the other lenders thereunder.
Bear, Stearns & Co. Inc. acted as financial advisor to AREP in this transaction. Goldman Sachs acted as financial advisor to Whitehall. Sullivan & Cromwell LLP acted as counsel for Whitehall and Brownstein Hyatt Farber Schreck acted as counsel to AREP.
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