Tags: US | Tropicana | Entertainment | Icahn

N.J. Hands Over Tropicana Casino Control to Icahn

Thursday, 04 Mar 2010 03:59 PM

New Jersey on Wednesday ended its conservatorship of Tropicana Casino and Resort after 27 months and gave final approval of its sale to billionaire Carl Icahn.

The state Casino Control Commission also gave Icahn interim casino authorization, allowing his company to take over operations. He bought it out of bankruptcy last year for $200 million.

The approval gives Icahn a stronger grip on a quickly expanding empire of casinos he's bought relatively cheap out of bankruptcy.

In January, he received regulatory approval to take control of nine Tropicana Entertainment LLC casinos in Nevada, Indiana, Louisiana and Mississippi as they emerged from a separate bankruptcy.

He's reorganizing them into a publicly traded company and plans to put them eventually under the same umbrella as the Atlantic City landmark.

This year, he also bought the unfinished Fontainebleau Las Vegas casino resort on the strip. On top of all that, last December, he bought the first-lien debt in Trump Entertainment Resort's three Atlantic City casinos. Now, he and banker Andy Beal are slugging it out against a group that includes Donald Trump to become the owners when that company emerges from bankruptcy.

New Jersey regulators took a major role in running the Tropicana after refusing to renew the operating license of then-new owner William J. Yung III in December 2007, when his drastic cost-cutting measures left the casino dirty and understaffed.

Former state Supreme Court Justice Gary Stein became conservator for the state.

Wednesday's action gives Icahn's company authorization to run the casino for nine months — it could be extended to a year — while regulators investigate its suitability to operate the casino permanently.

As part of the interim authorization, the Tropicana Atlantic City Corp. created a new trust overseen by Harold First, who has worked for Icahn in the past.

"This is a major step in what has been a more lengthy process than any of us could have anticipated," Casino Control Commission Vice Chairwoman Sharon Anne Harrington said. She said Icahn's return to casinos in New Jersey brings a "sign of rejuvenation and optimism in the market."

From 2000 to 2006, the investor owned the Sands Hotel & Casino.

Atlantic City's casinos have had three consecutive years with falling revenue as they have contended with a recession and increased competition in Pennsylvania and other nearby states.

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