Carl Icahn could corner a third of the Atlantic City gaming market if he beats Donald Trump and bondholders in heated bankruptcy proceedings over the fate of Trump Entertainment Resorts.
Icahn is looking to add the Trump casinos to a portfolio that would include the Tropicana Casino and Resort, which he agreed to buy out of bankruptcy last year for the heavily discounted price of $200 million.
Icahn’s combined ownership of Tropicana and the Trump casinos would represent about a third of Atlantic City’s $3.9 billion gaming market. Bondholders contend such holdings by a single person would violate the New Jersey Casino Control Act’s ban on “undue economic concentration.”
Icahn’s attorneys disputed that argument, pointing out that Harrah’s Entertainment Inc. already has a bigger share of the market through its ownership of the Bally’s, Caesars, Harrah’s Resort and Showboat casinos. Altogether, the Harrah’s casinos control about 40 per cent of the Atlantic City marketplace.
While Donald Trump appears to be arguing that Carl Icahn has a bad recording managing casinos, he has little credibility throwing stones right now:
“The debtors are in fact teetering on the edge of a cliff or may have already gone over,” Icahn lead attorney Jeffrey Jonas said of Trump Entertainment. “There is a real risk the company could plunge into liquidation in April.”
Jonas noted the Trump casinos have been in Chapter 11 bankruptcy three times since the early 1990s. He claimed they could fall into bankruptcy a fourth time if bondholders get control of the company. He also said the Trump casinos have missed their financial projections in nine of the last 10 years and have been slashing capital spending to avoid a financial crisis.
Given Carl Icahn’s recent activity in Las Vegas, it’s clear he’s betting big on U.S. casinos.
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