Carl Icahn appears to have done it again. With bankrupt Adamar of New Jersey Inc. heading to court Friday to seek approval of a deal to sell its assets, the billionaire financier has positioned himself as part of a group that will soon proclaim ownership of the Tropicana Casino & Resort in Atlantic City, N.J. All for the bargain basement price of just $200 million via a credit bid.
How much of a discount has Icahn (as well as lead lender Credit Suisse Group) been able to obtain? Consider that the Tropicana AC is the Garden State's largest gaming complex, was one of the cornerstones of Columbia Sussex Corp.'s $2.75 billion purchase of Aztar Corp. in mid-2006 and fetched early offers close to $1 billion before the economy slowed.
The purchase brings to mind Icahn's investment in GB Holdings Inc., which ran the Sands Hotel and Casino in Atlantic City. GB Holdings first filed for Chapter 11 on Jan. 5, 1998, and won confirmation of a reorganization plan two years later through which an Icahn-controlled group invested $60 million and got equity. Six years later, in September 2006 during GB Holdings' second bankruptcy case, Icahn sold the casino for $270 million -- more than quadruple its original investment. (The Deal Pipeline subscribers see the story.)
His Midas touch with casino properties doesn't end there, either. In April 2007, his American Real Estate Partners LP sold four casino properties in Nevada for $1.2 billion, with the company trumpeting a $1 billion gain on its investment.
With Icahn on the verge of owning the Tropicana AC, he appears poised to capitalize on a casino bankruptcy once again. His Icahn Capital LP led a $150 million exit loan for the Tropicana AC's former owner, Tropicana Entertainment LLC (The Deal Pipeline subscribers see the story), and the Press of Atlantic City has reported that Tropicana Entertainment is thinking of possibly combining its casinos with the Tropicana AC under Icahn's ownership. If such a plan materializes, Icahn will once again have positioned himself nicely for a post-recession world. - Ben Fidler
Continue reading below
