Tropicana to Try to Block Sale of Tropicana City Casino in Atlantic City
If Conservator Accepts Unreasonably Low Price
LAS VEGAS, NV, September 24, 2008. Tropicana Entertainment CEO Scott Butera said today that the reported indication of interest by Cordish & Co. in the purchase of the Tropicana City Casino and Resort in Atlantic City is likely to be below the underlying value of the asset and that Tropicana intends to pursue legal and other strategic alternatives to block that proposed sale by the New Jersey state appointed conservator of the casino.
According to Butera, the securities that Cordish is said to be putting up for the purchase are likely to be well below the stated value, thus making highly suspect the $700 million sale price referenced in media reports yesterday. Given the softness in the $700 million number, Butera is urging conservator Judge Gary Stein to make the Cordish term sheet public so that all of Tropicana's constituents, including taxpayers and officials of New Jersey state and city government, can fully evaluate the actual value of the deal being proposed.
Butera asserted that current economic conditions, an unexpected decline in the gaming business in New Jersey, and a mandated deadline for the sale have combined to produce unreasonably low offers for the casino property. He also pointed out that the reported term sheet from Cordish, even if the value of the securities portion could be substantiated, is well below previously reported offers.
"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," Butera said.
"That's why we have proposed working cooperatively with the New Jersey Casino Control Commission to assume control of the property," Butera continued. "By incorporating the Atlantic City operations into the Tropicana family, we expect to stabilize and improve operations and build a stronger, more financially healthy brand. In the end, we believe that our plan would maximize the Atlantic City assets in a way that a sale process cannot possibly achieve at this time.
"Under the circumstances," he concluded, "our process represents the most equitable course for determining the highest and best use for the Atlantic City assets, an outcome which is in keeping with our fiduciary obligations to creditors, employees, customers, local communities and taxpayers."
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