Tropicana Proceeds With 363 Sale Process
The Atlantic City casino will be sold for a minimum of $200 million, although bidders are expected to clamor.
April 30, 2009
Tropicana will proceed, as planned, with its Section 363 bankruptcy sale of its Atlantic City casino and resort. Retired Justice Gary S. Stein, the state-appointed trustee and conservator of the company will oversee the process.
The New Jersey Casino Control Commission granted authority to Stein to seek a stalking horse bid allowing the Tropicana’s lenders to buy the casino for at minimum $200 million. However, it has been reported that bidders will likely clamor for what could become a valuable asset.
“We have initiated the Section 363 process in order to complete a sale of the Tropicana in an orderly, efficient and legally binding manner,” Stein said. “By starting out with a stalking horse bid and providing for an auction to facilitate competitive bidding by other qualified buyers, this process is intended to achieve the highest price possible in light of current conditions in the gaming industry.”
The sale process was initiated today at the US Bankruptcy Court in Camden, New Jersey. If approved, bid deadlines will come in 30 days, with an auction coming one week after the bid deadline. A court hearing will approve the winning bidder in about two months.
The Tropicana in Atlantic City will remain open throughout the process, said Mark Giannantonio, its president and operating chief.
The woes of the Trop highlight a broader difficulty experienced by the gaming industry. A downturn in willing bettors, construction that carried on as if debt could be continually accumulated and plummeting real estate values have shaken Atlantic City and Las Vegas to the core, calling into question the viability of operations that have easily withstood prior recessions thanks to the sin industry being, above all, dependable, even in bad times.
Still, recovery could be near. MGM Mirage, which, along with Dubai World, co-owns the ambitious (even by Las Vegas standards) still-developing CityCenter, just cut today a deal with creditors that should allow it to complete the project, which until recently was in limbo. MGM Mirage’s shares traded as much as 50% up earlier.
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