Potential buyer of Alantic City casino emerges

September 23, 2008 5:35:17 PM PDT
The company that helped revitalize Baltimore's Inner Harbor and built a wildly popular shopping district in Atlantic City was chosen Tuesday as the potential buyer of the Tropicana Casino and Resort by a state trustee overseeing the property.Trustee Gary Stein said the Cordish Company has offered to buy the gambling hall, which includes one of New Jersey's largest hotels, for $700 million in cash and stock.

The bid by Cordish will be submitted to a bankruptcy court judge in Delaware, which will conduct an auction where other companies can submit higher bids if they wish to buy the Tropicana.

No time frame was offered for the auction to be completed, although bankruptcy advisers said they typically last between two to three months after the paperwork has been filed.

Cordish, which developed The Walk, Atlantic City's popular downtown shopping district between the convention center and the Boardwalk casinos, also had been a bidder for the Tropicana during an initial round of bids earlier this year.

Those bids were scrapped when Stein determined they were all too low. He would not reveal how many bidders there were, or how high they went.

"We are extremely excited about purchasing the Tropicana in Atlantic City," said company Chairman David S. Cordish. "Our development and gaming management experience, both in Atlantic City and nationally, makes us ideally suited for maximizing the property."

Just last Friday, Cordish was selected by the state of Kansas to develop a casino there.

David Cordish said the company is ready and able to close the sale quickly, and plans to work with unions and existing tenants at the Tropicana on a smooth transition.

Stein declined to comment beyond a written statement that said Cordish was chosen based on its capabilities and track record in gambling properties, real estate development, and management.

The company is also known for redeveloping parts of Baltimore's popular Inner Harbor, and has done projects in Hollywood and Tampa, Fla.; Charleston, S.C.; Houston and Louisville, Ky.

In Baltimore - the company's hometown - Cordish built The Power Plant, filling a once-vacant power plant with an ESPN Zone, Barnes & Noble and Hard Rock Cafe. A giant red guitar next to the building's smokestacks is a tourist icon.

About two blocks away, it built Power Plant Live! It's a collection of restaurants and bars with outdoor seating and a live concert stage.

The declining economy is believed to have lowered the asking price for the Tropicana, which was estimated earlier this year at $1 billion.

The highest publicly known bid earlier this year was for $950 million from a New York developer, Joseph Palladino. An $850 million bid was made by Colony Capital LLC, which owns Resorts Atlantic City and the Atlantic City Hilton Casino Resort. Planet Hollywood also submitted a bid, whose amount was not publicly revealed.

Colony Capital would not say Tuesday whether it remains interested in bidding for the Tropicana, and Planet Hollywood did not immediately respond to telephone and e-mail messages Tuesday asking the same question.

It is possible another bidder could submit a higher offer for the Tropicana before Cordish's bid is submitted to the bankruptcy court, officials said.

State regulators stripped the Tropicana's former owners, affiliates of Kentucky-based Columbia Sussex Corp., of the their casino license last December, necessitating a sale of the property.

It was only the second time in 29 years that New Jersey had denied a casino license renewal.

Almost immediately after buying the Tropicana in January 2007, the company began slashing payroll, eventually eliminating nearly 1,000 jobs.

That led to problems with cleanliness and service. Guests complained that their rooms were infested with bedbugs, and that dust was so thick they could write their names in it with their fingers. It sometimes took 45 minutes for slots winners to be paid their jackpots because the company laid off so many attendants.

The Tropicana has remained open since December under the direction of Stein, a retired state Supreme Court Justice who has been seeking a buyer.

Tropicana president Mark Giannantonio, who was kept on to run the casino's day-to-day operations, began hiring back some staff, and the casino launched an aggressive promotional and marketing effort to try to win back gamblers who had stopped coming.

Since then, service and cleanliness have improved, but the casino still struggles to regain market share. Through August, the most recent period for which figures have been compiled, the Tropicana's revenues are down nearly 10 percent so far this year, compared with a 5.2 percent decline for all 11 of the city's casinos.


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