In general terms, the Baltimore-based Cordish says it will spend $100 million on top of the $700-million sale price to renovate and reposition the 2,100-room property and its 150,000 sf of casino and retail space. Those general plans were released by bankruptcy conservator Gary Stein, a former New Jersey State Supreme Court justice and current partner in the Hackensack law firm of Pashman Stein, who's overseeing the sale.
That information, as well as details of the pending sale itself, was released by Stein in response to Tropicana Entertainment's threats to block the sale. The Trop's troubles started in December when the Casino Control Commission pulled the hotel's gaming license, citing a number of violations. Ownership's inability to regain that license effectively threw it into bankruptcy court, and the sale when it occurs, will effectively be an auction.
Tropicana Entertainment's gripe centers on the price, which it considers too low. The property had been expected to go for a number in the $1-billion range, and offers in the $900-million range were put on the table.
Cordish actually has two offers on the table. The first is for $700 million, involving $450 million in cash and $250 million in notes. The other is an all-cash deal for $575 million. In any case, and the pending sale notwithstanding, the property is still officially up for grabs for higher bids, although Stein and Cordish are said to be deep in negotiations. Stein could not be reached for comment.
"The purported price understandably reflects a fire-sale mentality on the part of prospective buyers, who see an extraordinary opportunity in a depressed market, which creates a windfall at the expense of other innocent parties," says Tropical Entertainment CEO Scott Butera, in a statement. "That's why we have proposed working cooperatively with the New Jersey Casino Control Commission to assume control of the property. We will fight against anyone trying to complete a fire sale at what we feel is a very low value."
For its part, Cordish is moving ahead with post-acquisition plans. "We are extremely excited about purchasing the Tropicana," says Cordish chairman David Cordish, in a statement. "Our development and gaming management experience…make us ideally suited for maximizing the property. We look forward to closing on the property quickly."
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