Carl Icahn Finalizes Purchase of Trump Taj Mahal from Bankruptcy
The Trump Taj Mahal is out of bankruptcy. The casino which once was the lynch pin of Donald Trump’s gambling empite now belongs to Carl Icahn, the investment billionaire. The bankruptcy process has lasted a full 16 months, since October 2014.
The Trump Taj Mahal emerged from bankruptcy on Friday. Carl Icahn has been the effective owner of the Atlantic City casino for over a year, when he loaned the casino $20 million to keep its doors open in 2015. Now he owns the casino officially.
Trump Entertainment’s Bankruptcy
Trump Entertainment Resorts entered Chapter 11 bankruptcy in October 2014. Icahn Enterprises LP was the largest single creditor for the gaming company at the time, with Carl Icahn holding $286 million in debt. That placed him in prime location to buy the company, simply by forgiving the debt and offering to pay off its other bills.
The bankruptcy deal Friday ended Donald Trump’s relationship with the Atlantic City casino he founded. The frontrunner for the GOP presidential nomination was the chairman and CEO until 2009, when Trump had to declare bankruptcy. Creditors pushed him from control of Trump Entertainment Resorts in February 2009, but kept him name for marketing purposes by offering Trump a 10% stake in the company.
Donald Trump No Longer an Owner
That latest deal ends the 10% ownership for Donald Trump, while maintaining the name for the Taj Mahal casino. Carl Icahn, who owns Tropicana Resort in Atlantic City, has a good relationship with Donald Trump and his daughter, Ivanka. When Icahn first took control of operations in February 2015, the two had praised the takeover and told the public Icahn would turn the casino’s fortunes around.
If the Tropicana’s recent history is any indication, the Trump Family is right. Carl Icahn rescued Tropicana from bankruptcy court in 2010, after a disastrous set of moves by its previous ownership. In 5 years, Carl Icahn turned the AC casino into a profitable business — at the same time that four other Atlantic City casinos closed their doors.
Carl Icahn Press Release
Carl Icahn referenced that turnaround in a press release announcing his acquisition on Friday. Icahn’s statement read, “The Taj is one of Atlantic City’s signature properties. Although both Atlantic City and the Taj have had a few tough years, today marks the beginning of the turnaround.”
“Just a few years ago Tropicana was in bankruptcy and its fate uncertain, but since emerging in 2010, we have turned that property around and it has become one of Atlantic City’s few success stories. I am confident we can and will do the same for the Taj.”
Everything still isn’t settled. Carl Icahn still has major labor issues to consider. He and the Trump Taj Mahal workers union are still involved in a bitter and protracted dispute over benefits.
Local 54 of Unite-HERE
Carl Icahn won a court decision in October 2014 that took prospective health and retirement benefits from the Local 54 of the Unite-HERE union. That led to several protests against Carl Icahn and the Trump Taj Mahal over the intervening months.
It also led to a public war of words between Carl Icahn and Bob McDevitt, president of Local 54 of the Unite-HERE. Carl Icahn compared Bob McDevitt to a mob boss, while McDevitt called Carl Icahn a “malignancy that needs to be cut out“.
Labor Issues Need Resolving
With such a contentious history, the new ownership still has issues to surmount. But Bob McDevitt struck a (somewhat) more conciliatory tone when asked to comment on Friday’s news.
McDevitt said of Carl Icahn’s latest acquisition, “Maybe now that Carl Icahn has full possession of the property, he’ll start treating the workers the way you would if you have long-term interest in making the property successful.”
$100 Million Investment Is Condition
Carl Icahn had not owned the Trump Taj Mahal for a full week before he told the press that his proposed $100 million investment in the Trump Taj Mahal’s renovations were conditional. If the people of New Jersey approve two North Jersey casinos in the November 2016 elections, Icahn said he does not expect to invest the kind of money he once promised.
In the billionaire investor’s mind, if North Jersey casinos are built, they will take enough traffic away from Atlantic City casinos that a hundred million dollar investment likely would not be worth the trouble. It is unknown at present if that means Carl Icahn would not invest anything in his new casino, or whether he would lower the dollar amount of the investment.
