Billionaire Carl Icahn is considering spending $100 million to save the Trump Taj Mahal casino from closing.
But the offer comes with considerable strings attached: Icahn is willing to consider the bailout "if and only if" he gets big givebacks from the casino workers' union, steep tax breaks from Atlantic City and county, and $25 million in funds from a New Jersey agency.
In a filing to a bankruptcy court, the Taj Mahal's parent company, Trump Entertainment Resorts, presented a letter from Icahn's attorney saying the billionaire would consider bailing out the casino if the debt he owns in it were converted to equity that would give him ownership.
Icahn, who bought Atlantic City's Tropicana in 2010 in a similar manner, wants the city to drastically reduce the Taj's taxes, the union to give up pension and health insurance, and a state redevelopment agency to provide the $25 million.
"Notwithstanding the fact that putting more money into the Taj is a questionable business decision, we share the company's desire to see the Taj Mahal remain open and preserve the jobs of the company's employees," Icahn attorney Allan Brilliant wrote in a Sept. 23 letter to Trump Entertainment Resorts in response to the company's offer to hand ownership to Icahn. Failing to get the concessions "would make it impossible to operate a viable company at this time."
The court filing made Friday paints a dismal portrait of the Taj Mahal's finances, and holds out no hope of its survival beyond November without Icahn's money and the related concessions. Trump Entertainment has threatened to close the casino on Nov. 13 and lay off its 2,041 full-time and 825 part-time employees. It would be the fifth of Atlantic City's 12 casinos to close this year.
The filing claimed that the casino union, Local 54 of Unite-HERE, indicated a willingness to have its members forego participation in its pension plan in favor of a 401(k) plan, but was not willing to jettison health coverage in favor of having workers find their own insurance under the Affordable Care Act, as Trump Entertainment wants them to do.
Union president Bob McDevitt said the proposal would cut total compensation to workers — many of whom earn $12 an hour — by 35 percent. He said Icahn is "seeking to take advantage of the Atlantic City crisis to do away with the health care thousands of south Jersey casino workers and their families have fought for and relied upon for over 30 years. The impact of these proposals throughout south Jersey communities would be dire."
McDevitt also revealed that the Icahn-owned Tropicana has informed the union it wants major givebacks in its next contract so that, "Tropicana can avoid the fate of other failed casinos and the terrible job losses that are happening to your members."
The $100 million Icahn would invest in the Taj Mahal would be used to defray cash shortfalls and upgrade rooms at the older of the casino's two hotel towers.
An aide said Icahn was not available for comment Monday.
The proposal, crafted by Trump Entertainment and only informally agreed to by Icahn, calls for the city reducing the tax assessments of Trump Plaza (which closed on Sept. 16) and the Taj Mahal from $248 million and $1 billion, respectively, to $40 million and $300 million, respectively. A spokesman for Atlantic City Mayor Don Guardian had no immediate comment.
It also calls for the Casino Reinvestment Development Authority to provide $25 million in tax credits or other investments. John Palmieri, executive director of the agency, said he has not received the request yet, but added the agency is not allowed by law to give financial assistance to the casinos that is gambling-related.
Trump Entertainment said the company is losing $7 million a month and anticipates running out of money the week of Dec. 19. Even closing the Taj Mahal — its only remaining casino — would likely only buy the company two or three more weeks of breathing room.
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