Tropicana Entertainment Chief Executive Officer Scott Butera questioned the validity of a bid made public Tuesday for the beleaguered Tropicana Atlantic City, saying his company is going ahead with its plans to regain control of the property.
Baltimore-based real estate developer Cordish Co. and the state-appointed conservator of the Tropicana Atlantic City have entered into negotiations to sell the property for $700 million, both parties announced Tuesday.
Butera called the timing of the announcement “odd” considering three weeks remain in the bidding process set forth by trustee Gary Stein to sell Atlantic City’s largest hotel-casino.
“I think it’s very unusual that something credible would be released before deadline,” Butera said of a bidding process that ends Oct. 16. “At a minimum, I’d have to question the credibility of something like that.”
Butera added: “If you were a good buyer of an asset the last thing you’d want other bidders to know is where you stood. It’s pretty unusual something like this would come out and, because of that, I just have to question the credibility.”
The Tropicana Atlantic City was put up for sale after the New Jersey Casino Control Commission denied a gaming license in December to embattled Kentucky-based hotelier Bill Yung III, who wholly owns Tropicana Entertainment.
After the license denial, bond holders of nearly $3 billion in debt forced the company to default on some of its debt covenants, which led to a Chapter 11 bankruptcy protection filing in Delaware in May.
Tropicana Entertainment filed papers in August with the U.S. Bankruptcy Court in Delaware saying the company was petitioning New Jersey gaming regulators to reconsider its decision.
Butera said company officials are working with New Jersey regulators to outline the parameters of what the new Yung-less company will look like.
Butera also told Nevada gaming regulators in August about the company’s intent to regain control of the New Jersey property.
“(The Cordish announcement) doesn’t change anything from our perspective,” Butera said “We’re still committed. If the sales process ends in something that makes sense (for the creditors), that’s great. If it doesn’t, we’re committed to working toward trying to manage that asset.”
Butera said he was unsure if the $700 million price reflects the value of the property, which has 2,129 hotel rooms, 4,330 slot machines and 176 table games.
The Atlantic City Tropicana accounted for 40.2 percent of the company’s revenues and 42.9 percent of company cash flow the first three quarters of 2007.
Tropicana Entertainment owns and operates 11 casinos in the United States including the Tropicana on the Strip.
If the company can’t regain control of the property, it needs to be sold at a price that reflects its true value, which may be hard in the current depressed credit market, according to Butera.
“We certainly don’t want to lose the asset for something that doesn’t reflect its value or essentially gets it stolen from us,” he said.
Casino Control Commission spokesman Dan Heneghan said no filing asking regulators to reconvey the hotel-casino ownership back to Tropicana Entertainment has been received.
“If Tropicana Entertainment submitted some form of petition, the commission would certainly review it and take whatever action is appropriate,” Heneghan said. “At this time, the sale process continues to move forward.”
Butera was appointed Tropicana Entertainment’s president in March and chief executive officer in June as Yung seceded operational control of his wholly owned company.
The company also recently formed a four-member board of directors to operate the company independent of Yung’s influence.
All three moves came from pressure by bond holders to remove Yung, who is widely blamed for losing the New Jersey license, from day-to-day operation of the casino company.
A deal with Cordish is far from being finalized.
The sale would need approval from New Jersey gaming regulators and the bankruptcy court in Delaware.
The deal would have to go back to New Jersey regulators for approval of interim approval of a gaming license while the new owner is investigated for a permanent license, a process that could take a year.
Contact reporter Arnold M. Knightly at firstname.lastname@example.org or 702-477-3893.