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Tropicana buyer's offer going down

Jan 23, 2009 2:02 AM
Staff & Wire Reports |

All bets may soon be off over who may be the new owner of the Tropicana Casino and Resort.

That's because a Baltimore company designated as a purchaser has lowered its offer due to the continuing economic crisis, jeopardizing a possible deal.

The Cordish Company, selected by a conservator overseeing the troubled casino until it can be sold, had offered $700 million in cash and stock, or $575 million in an all-cash deal.

But that offer is no longer on the table, according to several participants in negotiations for the casino. Sean Mack, an attorney representing conservator Gary Stein, confirmed Wednesday that Cordish has lowered its offer, but would not say what the new figure is.

"It's lower than the public numbers," he said.

Likewise, Gil Brooks, who represents creditors of the Tropicana who hold a $1.3 billion mortgage on the property, said Cordish has come down too far. He, too, would not reveal the current offer.

"It has become unacceptable for my clients," he said.

And Kris Hansen, a lawyer for unsecured Tropicana creditors _ who have lower priority in terms of who would get paid in bankruptcy _ said accepting the reduced offer would be worse than just letting the former owners, Tropicana Entertainment LLC, regain control of the casino.

Tropicana Entertainment has cut ties to Kentucky hotel baron William Yung III, whose major cutbacks led to the company losing its license in December 2007. The company is trying to regain its license, citing new management and internal reforms.

Cordish Company president David Cordish did not immediately return a message seeking comment Wednesday.

The state Casino Control Commission on Wednesday gave Stein an extra two weeks to finalize a purchase agreement with Cordish. The deal is expected to be presented to the commission for approval at its Feb. 18 meeting.

Stein would then file for a bankruptcy court sale shortly afterward in which Cordish's offer would form the minimum price. Other interested parties could bid more.

As the sale nears, the Tropicana said it is freezing pay for top earners, capping wage increases for others and considering laying off as many as 117 employees.

Casino president Mark Giannantonio says the Tropicana is doing everything it can to avoid layoffs because it knows it will need staffing once the economy improves.

"We're working our way through a very difficult economic situation and attempting to try to avoid layoffs," he said Wednesday morning. "We're trying to do other things like reduced work weeks and altering schedules to keep people employed so that when the economy does improve, we'll still have them around."

In the interim, the Tropicana is instituting a pay freeze for employees making $50,000 and up, and capping annual raises for lower-paid employees at 2 percent per year, Giannantonio said.

Also on Wednesday, the casino commission rejected a request to participate in the sale process by the lawyer for 27 laid-off Tropicana workers who are suing the casino, alleging age discrimination.

The commission agreed to grant limited participation rights to creditors and investors.

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