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Business

Trump, Icahn trade barbs in Atlantic City casino fight

By
Richard Wilner
Published Dec. 20, 2009, 5:00 a.m. ET

Most Atlantic City smackdowns involve professional wrestlers, not billionaires with legal papers, but a steel-cage match is shaping up between Carl Icahn and Donald Trump over the bankrupt Trump Entertainment casinos.

The two Queens natives, just days after the battle took shape, are already trading barbs, with Trump saying Icahn “runs companies so badly that I think it’d be really bad for the company if he took over.”

The developer said Icahn has been involved “in many bankruptcies,” and then ticked off TWA, WCI and Sands Casino.

Icahn, the pride of Far Rockaway, countered that “we run companies successfully in many areas, but on point, let’s talk about casinos — Donald’s favorite business.”

“I purchased the Stratosphere in Las Vegas out of bankruptcy for $300 million in 2000, cleaned it up and sold it one-and-half-years later for $1.3 billion.”

“Somehow,” Icahn added, “I don’t notice the same record at the Taj which went bankrupt three times under Donald’s stewardship.” Icahn said that if he is successful in gaining ownership of the Trump Taj Mahal, Trump Plaza and Trump Marina, he may take Trump’s name off the building.

The rumble being played out in bankruptcy court may be the biggest attraction down at the Jersey Shore since Snooki and Mike “The Situation” tried to hook up.

The battle took shape quickly.

Earlier this month, Icahn — call him Carl “The Situation,” after the popular “Jersey Shore” character — bought 51 percent of the $486 million senior, secured bank debt for about 93 cents on the dollar. Last week, a judge ruled that the 83-year-old investor could push his plan to take over the casinos alongside Trump’s plan.

Trump — call him DJ Donnie T — has the support of the bondholders and could get a 10 percent equity stake in the company if his side wins. That would be down from the 23 percent stake he held before the February filing.

After spending about $225 million to purchase a majority of the bank debt of the companies, Icahn is promising to pump another $225 million into the ailing gambling emporiums. If successful, he will get a controlling stake in the company and Trump will get zilch.

Ivanka Trump — okay, call her Snooki — is a former board member of the money-losing company.

Trump, who was not involved in the day-to-day operation of the casino, asked The Post, rhetorically, “Hey, who’s hotter than me? Nobody.”

Said Icahn: “If hot means being able to burn other people’s money, I guess he’s correct.”

The heavyweight battle comes at a strange time — when the gaming sector is reeling from a consumer pullback because of the recession and the rollout of many new casinos. Also, the move by Icahn comes as Atlantic City is taking it on the chin and its prospects have never looked grimmer.

Total Atlantic City revenues this year through Nov. 30 are down 13.5 percent. Roughly one-quarter of all gambling dollars have disappeared from AC over the past three years — amounting to almost $1 billion less in revenue through the first nine months of 2009 — and the outlook isn’t getting any better as glitzy, new rivals in Pennsylvania are ready to come on line and siphon off even more customers.

“It just gets worse for Atlantic City,” said Justin T. Sebastiano, an analyst with Morgan Joseph & Co., who follows the gaming sector. “I truly believe Atlantic City is permanently disfigured.”

Dennis Forst, a gaming analyst with Keybanc Capital Markets, said the city blew a 30-year window to make itself a destination location, a unique place that would be able to compete against rivals.

Atlantic City was the only game on the Eastern Seaboard when it came online in the Seventies. But now casinos in Maryland, Delaware, Pennsylvania and in Yonkers, NY, draining off customers. And just last week, the Shinnecock Tribe on Long Island took a major step toward getting the right to open a Long Island casino.

The Trump casinos throw off plenty of operating cash but are burdened with too much debt. The downturn in the AC market has trimmed $125 million from its winnings over the first 11 months of the year compared to last year.

Icahn, in court papers, said if the Trump side succeeded in getting its plan approved, management would simply leverage the company back up and it would be forced to file for Chapter 11 protection a fourth time.

Additional reporting by Josh
Kosman and Kaja Whitehouse.