Troubles at the Tropicana began in December 2007 when the Casino Control Commission refused to renew Tropicana's casino license. The Atlantic City property was then placed under the supervision of a trustee, former New Jersey Supreme Court Justice Gary Stein, who ordered the asset's sale.
Experts estimated the 150,000-sf casino, 2,100-room hotel and an entertainment and retail complex would fetch as much as $1 billion. Bids of $850 million and $950 million were put on the table, but a spokesman with Stein's office says the early bids didn't work out. "Justice Stein believed that the bids received earlier this year were too low," the spokesman says. "There was a perfect storm of events, including the economic downturn and the fact that the Tropicana's former parent company filed for Chapter 11, which made it impossible to really conduct an appropriate bidding process back then."
Kentucky-based Tropicana Entertainment LLC filed in May for Chapter 11 bankruptcy protection five months after it lost the Atlantic City license. In the filing, it listed assets of $2.8 billion and liabilities of $2.4 billion as of the end of February.
Like many other casinos in Atlantic City, the Tropicana has been plagued by falling revenues in 2008, which led Stein to entertain a bid somewhat lower than the original $1-billion estimate. Cordish Co. offered to buy the property for $700 million in cash and securities. Stein is now in the process of negotiating a definitive purchase agreement with Cordish, which previously developed the Walk, a 300,000-sf retail and restaurant development at the foot of the Atlantic City Expressway.
The bid has drawn protest from Tropicana Entertainment's executive team, which believes the casino property is being undervalued. According to a press release, Tropicana's executives say the securities that Cordish is putting up for the purchase are "likely to be well below the stated value, thus making highly suspect the $700-million sale price." In the release, Tropicana declared plans to pursue legal and other strategic alternatives to block the sale and called for the term sheet to be made public.
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