Friday saw the Trump Taj Mahal Casino in Atlantic City come out of bankruptcy thanks to billionaire investor, Carl Icahn’s Icahn Enterprises LP. The property had been in Chapter 11 and Icahn’s buyout of the debt relieved Donald Trump of his last 10% hold, but an earlier agreement will keep his name on the property if Icahn chooses. Trump has not been involved in the property beyond his name and a 5% stake and 5% in warrants since 2009.
Icahn was able to acquire the property by a debt to equity swap. The restructuring plan was given a green light in March and Icahn was approved by New Jersey officials to own the property last June. Icahn also acquired Tropicana Casino & Resort Atlantic City in much the same manner, now giving him two of the city’s largest properties.
The path from bankruptcy was not an easy wend however, and Icahn has been pumping money into the property since late 2014 when it filed for bankruptcy. He insisted up until the final moment that he would let the property collapse unless health insurance and pension benefits were eliminated for unionized workers; he won a key court decision for that, and although the union is still in negotiations for a contract, no real progress has been made.
Icahn celebrated the property’s salvation saying, “Although both Atlantic City and the Taj have had a few tough years, today marks the beginning of the turnaround,” he said. “Just a few years ago Tropicana was in bankruptcy and its fate uncertain, but since emerging in 2010, we have turned that property around and it has become one of Atlantic City’s few success stories. I am confident we can and will do the same for the Taj.”
Over the last few years the Taj Mahal has not fared so well, falling into disrepair by some visitor’s estimations and posting some of the worst revenue performances of the city’s 8 surviving casino properties – two of which were closed or not re-opened simply to reduce competition, and another put under deed restriction to keep a casino out. Gambling revenues for Taj Mahal were down by more than 16% for 2015, but still showing profit with a take of $180.2 million.
President of Local 54 of the Unite-HERE casino workers union, Bob McDevitt struck a note of hope while still belying the bitter dispute that had brewed between the parties when he said, “Maybe now that Carl Icahn has full possession of the property, he’ll start treating the workers the way you would if you have long-term interest in making the property successful,” according to multiple national media outlets including the Associated Press.
No plans have been announced yet for major changes at the property. Icahn also acquired Trump Plaza in the deal that gave him the Taj Mahal. That property was closed in September 2014 and Trump Entertainment Resorts filed a deed restriction for the casino last summer that would preclude it from being used as a casino for a decade. The move brought to three the Atlantic City casinos removed from the mix, resulting in stronger performances for the survivors.
The Showboat was operating at a profit when it closed. Atlantic Club was cannibalized to keep it out of the casino market before any viable bids to re-open it were entertained. A fourth casino that closed was Revel, which never truly got off the ground.