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Sep 24, 2008 2:42 pm US/Eastern
Former Tropicana Owner Tries To Block Sale
ATLANTIC CITY (AP) ―
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Fearing a "fire sale" price would leave nothing left for it after debts are paid, the former owner of the Tropicana Casino and Resort says it will sue to block the proposed sale of the casino to a Baltimore developer.
Saul Loeb/AFP/Getty Images
Fearing a "fire sale" price would leave nothing left for
it after debts are paid, the former owner of the Tropicana Casino and Resort
says it will sue to block the proposed sale of the casino to a Baltimore developer.
Tropicana Entertainment
LLC said Wednesday the proposed $700 million sale to The Cordish Company is
less than the property is worth.
A state-appointed
trustee tapped Cordish on Tuesday as a potential purchaser of the Tropicana in
a bankruptcy court auction. Other
parties can still submit higher bids for the property, which was stripped of
its casino license last December after problems with cleanliness, service, and
compliance with state gambling rules.
Tropicana Entertainment
is trying to regain control of the property—a move that is seen as a longest in
this seaside gambling mecca.
"The purported price
for the Atlantic City
property understandably reflects a fire sale mentality on the part of prospective
buyers who see an extraordinary opportunity in a depressed market, which
creates a windfall at the expense of other innocent parties," said Scott
Butera, Tropicana Entertainment's CEO.
He said the company "intends
to pursue legal and other strategic alternatives to block that proposed sale."
Cordish has offered
$700 million in cash and stocks to complete the purchase, subject to approval
by the New Jersey Casino Control Commission and a U.S. Bankruptcy Court judge
in Delaware.
But Butera questioned
the value of stock being offered as part of the deal, and called on trustee
Gary Stein, a retired state Supreme Court Justice, to make Cordish's entire
offer sheet public so that the value of the securities can be assessed.
Stein declined comment
Wednesday, and David Cordish, chairman of the company that bears his name, did
not immediately return a message seeking comment.
Butera said that
current economic conditions, coupled with a continuing downturn in the casino
industry in New Jersey,
and a mid-October deadline for selling the Tropicana, are producing "unreasonably
low" offers for the property.
The proposed $700
million sale is well below the property's debt level, leaving nothing left for
Tropicana Entertainment after a sale in bankruptcy court. Kentucky-based
Columbia Sussex Corp., a parent of Tropicana Entertainment, bought the company
that owned Tropicana casinos in Atlantic City
and Las Vegas
in January 2007 for $2.1 billion.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
