In what appears as an increasingly protracted sale of the troubled Tropicana Hotel & Casino in Atlantic City, the conservator in charge of selling it has asked the state agency that regulates the city's casinos to extend the sale period an additional 120 days and to allow him to reject all bids and start over.
The request made by former New Jersey Supreme Court Justice Gary Stein earlier this week has angered some of the bidders. They say such action, at a time when the capital markets are shaky and Atlantic City's gambling revenue continues to erode, is a huge risk.
"It's caused pause for us to continue," said New York developer Joseph Palladino, who submitted a $950 million offer for the Tropicana on Jan. 22, more than four months ago. The sale process "is going to be mired in both legal and regulatory issues for some time."
Although Stein initially said he received several dozen offers, only a handful have confirmed they put in bids. They include Palladino's team; a partnership between former Tropicana executive Dennis Gomes and Baltimore-based Cordish Co., which developed the Walk outlet mall in Atlantic City; Colony Capital L.L.C., of Los Angeles, whose subsidiary owns the Atlantic City Hilton and Resorts casinos on the Boardwalk; and Planet Hollywood, which owns a casino of the same name in Las Vegas.
Joe Weinert, senior vice president at Spectrum Gaming Group L.L.C., a gaming-consulting firm in Linwood, N.J., said: "The sale process has been victimized by a coalescence of uncontrollable events, including the negative impact from Pennsylvania casinos, high gasoline prices, a sour economy and, perhaps most importantly, the severely restricted credit markets."
Stein told the commission that the May 5 bankruptcy filing by former Tropicana parent Tropicana Entertainment L.L.C. encouraged bidders to make offers that were too low.
In January, before bidding began, Stein said he hoped the casino would fetch $1 billion or more. "It's clear the bids we received in May were not close," Stein said this week.
Tropicana Entertainment is a subsidiary of Columbia-Sussex Corp., of Fort Mitchell, Ky., which was stripped of its casino license Dec. 12 by the New Jersey Casino Control Commission for numerous violations. The commission then put Stein in charge.
The commission is expected to rule on Stein's request at its next meeting, June 18.
Meanwhile, the casino continues to bleed business. January-to-April revenue there was down 13 percent from the same period a year earlier, the largest drop among Atlantic City's 11 casinos.
Yesterday, the commission required the Tropicana to maintain a $19 million cash balance to get it through the slower winter months.