The New Jersey Casino Control Commission approved on Wednesday the sale of Trump Taj Mahal Casino Hotel to billionaire Carl Icahn. He has previously bought yet another emblematic Atlantic City gambling venue – the Tropicana Casino and Resort.
Mr. Icahn is to swap a total of $292 million of his debt in the company in exchange for ownership of the struggling casino. Furthermore, the billionaire investor is expected to spend more than $100 million to keep Taj Mahal alive.
Last year, gambling operator Trump Entertainment Resorts filed for bankruptcy in Delaware court and thus, put the casino in danger of becoming the fifth Atlantic City gambling property to close doors within less than a year.
Robert Griffin, Chief Executive Officer of Trump Entertainment, commented that there is a general perception among customers that Taj Mahal is to be shuttered anytime soon. According to the executive, Mr. Icahn would have to quickly infuse $40 million in order to improve its image. Yet, Mr. Griffin believes that Taj Mahal “will do well” after the bankruptcy suit is completed.
Back in March, a Delaware bankruptcy judge ruled in favor of the Trump Entertainment proposed reorganization. However, the company has not exited the court yet. Once a federal appeals court announces its decision on whether workers’ benefits are to be restored, the company will be able to emerge from its Chapter 11 protection.
Last October, Taj Mahal employees, who were also members of the UNITE HERE Local 54 labor union, had their health care and pension plans replaced with 401(k) ones. Since then, casino officials, Mr. Icahn, and workers have been locked in a legal battle for the potential restoration of the initial plans.
The billionaire investor has repeatedly called those exorbitant. Mr. Icahn has also pointed out that he would close Taj Mahal, provided that the appeals court rules in favor of Local 54 members’ demands. However, the businessman promised that he would improve the struggling property and its financial performance, if the final decision goes his way.
Yet, it seems that this would be quite a challenging task, as Taj Mahal posted a gross operating loss of $8.7 million for the first quarter of 2015. In addition, the property generated net revenue of $35 million, down almost 30% compared to the figures reported for the same period a year ago.
Last September, Trump Entertainment had to shutter Trump Plaza, yet another emblematic Atlantic City casino, owned by the operator. Mr. Griffin said on Wednesday that they have not decided yet what to do with the closed property.
