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Business

Trump Taj Mahal future in jeopardy after Icahn bails on deal

By
Josh Kosman
Published Dec. 18, 2014, 1:57 p.m. ET

Just when the 3,000 workers at the Trump Taj Mahal in Atlantic City thought their jobs were saved by an 11th-hour deal with investor Carl Icahn — the billionaire on Thursday appeared to have backed away from rescuing the bankrupt casino.

After orally agreeing late Wednesday to the terms put forth by the casino workers’ union, Icahn was not going ahead with the deal to pump up to $100 million into the ailing 25-year-old seaside property.

“Carl woke up and changed his mind,” a source said.

The union, Unite Here Local 54, was clearly perturbed by Icahn’s change of heart.

“We thought that we had come to an agreement with all parties that would resolve all of the issues with the Taj Mahal,” Bob McDevitt, president of Local 54, said in a statement.

“We signed it, and the Trump CEO signed as well,” the union boss said. “At noon [Thursday], we were told that Carl Icahn had gone back on his commitment and would not enter into the agreement. This is what we have been dealing with for some time now at this property. We are disappointed that Mr. Icahn’s whims are going to add to the feelings of uncertainty and instability that the workers have had to live with and have to endure during this holiday season and beyond.”

Without a deal — which is still possible should Icahn return to the bargaining table — the money-losing casino is scheduled to shutter Saturday.

Icahn is saying he never released a signature page and therefore can walk away from a deal in which he had agreed to give the union most of what it wanted, sources said.

Icahn owns all of the $292 million in banks loans to the Trump Taj Mahal, which is owned by Trump Entertainment. Icahn stands to lose most of that amount should the Taj close on Dec. 20. An agreement with the union would give Icahn ownership of Trump Entertainment — which includes the recently shuttered Trump Plaza — in exchange for his debt and a cash infusion of roughly $100 million.

At issue is whether Icahn will give in to union demands that he restore all work rules after earlier agreeing to restore just health care and some pension benefits.

Icahn had been fighting to have the right to outsource some services, including non-union restaurant workers.

Another option open to Icahn — short of a union agreement and taking control of the property — is to only provide $30 million in bankruptcy financing to keep the casino open until the summer while the two sides look to reach a deal or another suitor emerges.

Icahn did not return calls.