Billionaire investor Carl Icahn, who holds the mortgage on the Trump casinos, said Monday there is no way he will approve the proposed $20 million sale of Trump Plaza Hotel and Casino.
Icahn, in an interview with The Press of Atlantic City, contended the price is simply too low, although he declined to say how much he thinks Atlantic City’s poorest-performing casino is worth. In the meantime, Trump Plaza’s sale to a California company is on hold.
“It’s as black and white as it can be: They can’t sell that casino without our consent. It’s not going for anywhere close to $20 million,” Icahn said.
As Trump’s senior lender, Icahn must approve the deal. Icahn said he holds the mortgage for both Trump Plaza and Trump Taj Mahal Casino Resort. His office said the mortgage totals $289 million.
Icahn’s opposition is blocking the Meruelo Group, of Downey, Calif., from completing its $20 million purchase of Trump Plaza. The deal, announced in February, would be the lowest sale price ever for an Atlantic City casino.
Icahn said he privately told Trump Entertainment Resorts Inc., Trump Plaza’s parent company, about three months ago that he would not approve the sale, but the deal was announced anyway.
“They didn’t take no for an answer,” he said.
Icahn said he has no objections to the Meruelo Group as the buyer but would like to see the sale completed at a higher price. He alluded to the words of the Meruelo Group’s acclaimed Las Vegas architect, Paul Steelman, to underscore his belief that Trump Plaza’s proposed sale price is too cheap.
“I think it might be the most incredible purchase in the world,” Steelman told The Press during a February interview.
Trump Plaza’s strength is its prime location in the heart of the Boardwalk casino zone, at the foot of the Atlantic City Expressway entrance into town. The Meruelo Group said it was eager to take advantage of the location and would invest an extra $100 million into the casino to refurbish and rebrand it. Icahn argued that the location alone makes Trump Plaza more valuable than $20 million.
Meruelo has not yet said whether it would consider paying more for the casino following Icahn’s objections. However, the company did say that it has secured an option from Trump Entertainment to buy Trump Plaza later in the year if the mortgage can be satisfied.
“We are disappointed to announce that our acquisition of the Trump Plaza cannot be completed as planned at this time because Trump Entertainment has been unable to obtain a release of the mortgage held by their senior secured lender,” the Meruelo Group said in a statement Friday night announcing the deal was on hold.
Meruelo noted in its statement that it would have no further comment until the sale is completed. Trump Entertainment did not respond to messages Monday seeking comment.
Icahn finds himself in the position of deal-maker or deal-breaker for Trump Plaza three years after he lost a highly publicized bankruptcy fight with fellow billionaire Marc Lasry for control of the Trump casinos. Icahn had proposed converting his mortgage into ownership of the Trump properties, but the bankruptcy judge ruled in favor of the Lasry group.
Lasry, head of the New York hedge fund Avenue Capital Group, had won the backing of Donald Trump to buy the Trump casinos out of bankruptcy for $225 million. Trump was given a 10 percent ownership stake in the restructured company in return for the continued use of his name on the casinos.
Icahn said he has maintained a friendly relationship with Trump Entertainment ever since the bankruptcy case ended in 2010. He insisted he was not blocking the Trump Plaza sale to get revenge in the bankruptcy duel.
“It’s got nothing to do with revenge. At the right valuation, we would definitely approve,” Icahn said of the Trump Plaza deal.
Icahn pointed to the sale of the former Trump Marina Hotel Casino as a sign of his willingness to work with Trump Entertainment on the Trump Plaza deal. In 2011, Icahn gave approval for the $38 million sale of Trump Marina to the Houston-based Landry’s Inc. Landry's has since rebranded Trump Marina as the Golden Nugget Atlantic City following a $150 million facelift.
Icahn already owns one Atlantic City property, Tropicana Casino and Resort. Despite his earlier interest in buying the Trump casinos, he said he has no desire now to acquire Trump Plaza.
“We’re not looking to buy a small casino,” he said. “We’re looking to get a good price.”
Icahn noted that Trump Entertainment has been making interest payments on time for the mortgage. However, he believes the company has not been investing enough in Trump Plaza to improve it.
Trump Plaza finished dead last in gambling revenue in 2012 among Atlantic City’s dozen casinos, grossing just $102.5 million. Its gambling revenue plunged 25 percent overall for the year, including a 46 percent decline at the table games.
Opened in May 1984, Trump Plaza cost $210 million to build. Now badly in need of an overhaul, the aging casino hotel is stuck with outdated architecture and decor. The casino floor was last remodeled in 2006 and there has not been a major expansion since 1996.
The last expansion incorporated the 500-room Trump World’s Fair Casino into the property. Trump World’s Fair became a financial flop and was closed in October 1999, then demolished.
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