According to Tropicana Entertainment CEO Scott Butera, the company wants to run the casino because it believes there's a better chance of reversing the property's 48% drop in gross operating profits if it's integrated with the larger organization. "We have assembled a strong, highly competent new management team that is experienced in the Atlantic City market," says Butera, in a statement. "We want to immediately deploy our managerial and financial resources to serve the gaming public and provide tax and employment benefits to the community.
"The need for this action has been made more urgent by the decision of the New Jersey Supreme Court to hear Tropicana's appeal to regain its status," Butera says. "The conservator's sale process for the property, which we continue to support as a way to determine the credibility of current indications of interest, could be delayed for several months, far too long for the casino to be without the benefit of well-financed, professional casino management."
Originally estimated to be worth upwards of $1 billion, the possible deal with Cordish is in the $700-million range, which Tropicana Entertainment officials contend is far too low. In any case, the petition asks the CCC to appoint a co-conservator and give him the authority to bring the casino under Tropicana Entertainment's corporate umbrella where it will have Chapter 11 protection. Trop officials say they will then install new management and make investments to improve the casino's business so it can either be sold at a better price or realize longer term value as a going concern.
If the CCC grants the petition, the company says it will re-apply for a gaming license and ask the Commission to convene hearings "as soon as practicable" to determine whether the "newly constituted" Trop is qualified to hold a casino license. The petition asserts that the Trop qualifies for a license because the company has been "utterly and completely re-formed. Mr. Yung is no longer involved and neither he nor the senior corporate team he had in place have any influence or control over the affairs of the company."
"The issue here obviously involves maximizing value for our constituents," Butera says. "But New Jersey and Atlantic City have a lot at stake, too. Selling the casino at today's depressed prices could have the unintended consequence of lowering assessed values and drastically cutting city tax revenue. Faced with such a shortfall, lawmakers may be forced to increase individual property taxes.
"Likewise, assuming the sale is delayed until the Supreme Court rules, the business can't be allowed to falter," he says. "That, too, has consequences in terms of employment and overall returns to the city. These are outcomes that we should all work to avert."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
