Sold! Icahn group gets Atlantic City Tropicana at bankruptcy auction for 80% off

Billionaire investor Carl Icahn's back in the Atlantic City casino business for what amount to at least 80% off. A bankruptcy judge in Camden approved the sale of the Tropicana Casino & Resort to a group of creditors led by Icahn. They're getting it in exchange for $200M worth of debt in the Tropicana that they bought at a steep discount. When the casino-hotel fst went on the market 1-1/2 yrs. ago, the Tropicana was expected to fetch about $1B. Since then, the economy continued sliding and competition from racetrack slots parlors in other states has continued battering Atlantic City gambling houses. "Value these days is difficult to assess," Judge Wizmur said. "There is basically no other option available at this point." Mark Giannantonio, president of the casino, said customers won't notice any difference in day-to-day operations while the deal is in the process of closing, which is expected to take several months. "We will continue to deliver excellent service & first-class operations," he said. "We're excited about moving forward with the new owners." Icahn once owned the Sands Casino Hotel in Atlantic City but sold it in 2006 to Pinnacle Entertainment, which imploded it and never built a replacement. Oscar Pinkas, attorney for Icahn, said the business mogul is pleased to acquire the Tropicana, but hasn't yet laid out plans for its future. In addition to Icahn, the largest creditors in the group that won the Tropicana are Black Diamond Capital Management of Greenwich, CT & Schultze Asset Management LLC of Purchase NY, according to court documents. The new owners must now get temp approval from NJ casino regulators and obtain a full casino license, which could take a year. They also may need to form a new company to operate the Tropicana. That issue will be discussed next week at a NJ Casino Control Commission meeting. Whether Giannantonio & other current Tropicana managers will be retained has not yet been determined, officials said. The winning investors hold a $1.4B mortgage on the Tropicana. That enabled them to craft their offer in a way competitors were unable to match. They agreed to act as a so-called "stalking horse," laying down a bid in a bankruptcy court auction that set the floor for other bids. Because no one else exceeded it -- no one else even bid -- the stalking horse got the casino. The investors offered $200M of their debt for the casino. To beat their bid, another party would have had to offer more than $200M in cash or securities. This kind of low-ball offer worked well for Icahn before. He bought the Sands out of bankruptcy in '00 for $65M & sold it in '06 for $270M to Pinnacle. The Tropicana had to be sold because NJ Casino Control Commission stripped its former owners, an affiliate of KY-based Columbia Sussex Corp., of their casino license in Dec. 2007 for poor performance. Initially, regulators & casino executives expected the Tropicana to fetch about $1B, & early offers came close, including bids of $950M by a group of NY investors, & $850M from Colony Capital LLC, which already owns two casinos here, Resorts Atlantic City & the Atlantic City Hilton Casino Resort. Stein rejected the offers, claiming they were too low or questioning the financing behind them, & he started the process over. In Sept. 2008, Baltimore-based Cordish Company, which built Atlantic City's popular retail shopping district, called The Walk, & helped revitalize Baltimore's Inner Harbor, offered $700M in cash and notes, or $575M in an all-cash deal. But Cordish took that offer off the table as the economy continued to worsen. In March, the Icahn group made its $200M debt-swap offer for the Tropicana.