Tropicana CEO says Cordish casino purchase proposal undervalues asset; company trying to take control

By Caroline Salls

Pittsburgh, Sept. 24 - Tropicana Entertainment chief executive officer Scott Butera said Wednesday that the reported indication of interest by Cordish & Co. to purchase the Tropicana City Casino and Resort in Atlantic City will likely fall below the underlying value of the casino, and Tropicana intends to seek legal and other alternatives to block the proposed sale by the New Jersey-appointed conservator, according to a news release.

According to the release, Butera said the securities that Cordish is planning to put up for the purchase are likely to be well below the stated value, making the proposed $700 million sale price highly suspect.

Given the softness in the $700 million number, Butera said he is urging conservator judge Gary Stein to make the Cordish term sheet public so that all of Tropicana's constituents, including taxpayers and officials of New Jersey state and city government, can fully evaluate the actual value of the deal being proposed.

"The purported price for the Atlantic City property understandably reflects a fire sale mentality on the part of prospective buyers who see an extraordinary opportunity in a depressed market, which creates a windfall at the expense of other innocent parties," Butera said in the release.

"That's why we have proposed working cooperatively with the New Jersey Casino Control Commission to assume control of the property.

"By incorporating the Atlantic City operations into the Tropicana family, we expect to stabilize and improve operations and build a stronger, more financially healthy brand.

"In the end, we believe that our plan would maximize the Atlantic City assets in a way that a sale process cannot possibly achieve at this time."

Butera said current economic conditions, an unexpected decline in the gaming business in New Jersey and a mandated deadline for the sale have combined to produce unreasonably low offers for the casino property.

He also said the reported term sheet from Cordish is well below previously reported offers, even if the value of the securities portion could be substantiated.

Tropicana, a Fort Mitchell, Ky.-based gaming entertainment provider, filed for bankruptcy on May 5 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 08-10856.

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