The company yesterday informed the Delaware Bankruptcy Court, where parent Tropicana Entertainment's Chapter 11 filing resides, that it will submit an application next week to the New Jersey Casino Control Commission for permission to assume operational control of the 2,100-room Trop, which currently operates under the aegis of Stein, a former New Jersey State Supreme Court Justice. Trop officials will tell the Court that, "it is a key component in a reorganization framework that contemplates a minimum acceptable sale price of $950 million in cash," a spokesman tells GlobeSt.com.
In the filing, according to information released by the company, Tropicana officials will assert that if they were to assume control, they would petition to have the property integrated with Tropicana Entertainment's other holdings and placed under the jurisdiction of the Bankruptcy Court. "It would give management the ability to tap financing and other resources to make needed capital improvements," the spokesman says.
"Our creditors, employees and neighbors in Atlantic City cannot afford to have this marquee property purchased at a severely depressed price," says Tropicana CEO Scott Butera, in a statement. "Instead of engaging in a forced sale in the midst of an unprecedented financial crisis, we want to invigorate the management of the property, make significant investments in upgrades and assess the options. It just seems like the prudent thing to do."
The filing, according to information released by Tropicana Entertainment yesterday, proposes to give the company 60 days to "deliver its assessment on how to achieve the highest value," says a statement. "If the best option is a sale, then [we pledge] to conduct an auction and would contemplate asking the bankruptcy court to authorize a sale…at a price of at least $950 million. On the other hand, if the best value alternative is to defer the sale option and continue operating the casino, then [we] would include the property in the Chapter 11 reorganization plan."
Tropicana will also tell the Court next week that it has ended all agreements and relationships with William Jung, CEO of the Crestview Hills, KY-based Columbia Sussex, under whose watch the Trop lost its casino operating license for a number of violations. Under state law, the only way a casino/hotel property can get its license back once revoked is if it has new owners.
A couple of possible offers in the $850-million range did surface earlier this year, including one from Colony Capital. Mohegan Sun was also said to be in the running, as was New York City-based Private Family Office and a local partnership. "Justice Stein believed that the bids received earlier this year were too low," a spokesman for Stein's office told GlobeSt.com in September. "There was a perfect storm of events, including the economic downturn and Tropicana's Chapter 11 filing, which made it impossible to really conduct an appropriate bidding process back then."
For now, the top bid still on the table in the current economic climate is Baltimore-based Cordish's $700 million offer, a combination of $450 million in cash and $250 million in notes. To help counter that offer and bring in higher bids, the Trop has beefed up its management. Among the new hires brought in by Butera is veteran gaming executive Robert Yee, former president of Paris/Bally's Hotels & Casino Resorts in Las Vegas, as director of casino operations.
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