|By Suzette Parmley, The Philadelphia
InquirerMcClatchy-Tribune Regional News
April 29, 2009 --ATLANTIC CITY -- New Jersey's Casino Control Commission yesterday unanimously approved an agreement of sale reached by the trustee for Tropicana Casino Resort and a group of lenders that includes billionaire developer Carl Icahn.
The lenders would act as the stalking-horse bidder with a $200 million credit bid for the troubled Tropicana.
The vote paved the way for casino trustee Gary Stein to file for Chapter 11 reorganization yesterday in U.S. Bankruptcy Court in Camden, so the Tropicana could be sold at auction free and clear.
"This is a major step toward getting the Tropicana into the hands of owners who can meet New Jersey's strict licensing requirements," commission chair Linda Kassekert said after the decision.
A hearing on the Chapter 11 petition could be scheduled as early as tomorrow, one of Stein's attorneys, Sean Mack, said. Bids could be accepted as early as May 8, he added.
"I'm very pleased we got the approval by the commission," said Stein, a former New Jersey Supreme Court justice. "It allows us to move forward with the sale."
The tortuous sale process was triggered in December 2007 after the commission stripped the casino's former owner, William J. Yung III, of his gaming license.
The nation's lending crisis, Yung's financial problems, and the collapse of several Wall Street firms -- including the Bear Stearns Cos. Inc., Stein's financial adviser for the sale -- led to delays in selling the casino.
In the 14 months the Tropicana was on the market, Stein was unable to reach agreement with any bidders. Last month, he struck the deal with its senior lenders.
The casino's auction will come in an even more challenging gaming environment in Atlantic City, analysts say.
The seaside gambling resort reported a 19.4 percent decrease in revenue last month -- its largest year-over-year decline in the 31-year history of gambling here.
The casinos have lost a substantial chunk of their business to slots parlors in the Philadelphia suburbs. The Valley Forge Convention Center in Montgomery County was recently approved for 500 slot machines, and Philadelphia is on its way to adding two casinos.
"Atlantic City is still a day-trip, weekend-oriented market versus a true destination resort," said Alex Picou, managing director of gaming, travel, and leisure for KeyBanc Capital Markets Inc., of New York. "You still have competitive factors with the specter of additional competition from Philadelphia, and Delaware is contemplating table games."
The Tropicana reported a 21.1 percent decrease in revenue last month compared with a year ago, and a year-to-date decrease of 16.4 percent. The bankruptcy will not affect daily operations, Stein said.
Contact staff writer Suzette Parmley at 215-854-2594 or email@example.com.
To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to http://www.philly.com.
Copyright (c) 2009, The Philadelphia Inquirer
Distributed by McClatchy-Tribune Information Services. For reprints, email firstname.lastname@example.org, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.