Carl Icahn Began as a Wall Street Stock Broker Back in 1961
U.S. Bankruptcy Judge Kevin Gross has approved a bankruptcy restructuring plan for Trump Entertainment Resorts Inc.’s Trump Taj Mahal casino Atlantic City. Under terms of the plan, the new owner of the Trump Taj Mahal is Carl Icahn, the billionaire activist investor.
The plan gives Carl Icahn immediate control of the Taj Mahal casino, along with the still-closed Trump Plaza. Everyone involved, from Judge Gross to the Trump Family to the company’s board of directors, are assured that Icahn’s control means the casino operation will be a success. Though the New York City investor has dabbled in many industries, he knows the Atlantic City gaming industry quite well, from 5 years in the business.
Trump Taj Mahal Bankruptcy
Trump Entertainment has undergone the bankruptcy process since September 9, 2014, becomes the latest asset in Icahn’s growing Atlantic City portfolio. In 2010, he bought the Tropicana Casino when that hotel and gaming location underwent the bankruptcy process.
Several times since then, the company has threatened to close the Trump Taj Mahal. The Trump Plaza closed on September 16, 2014. Meanwhile, the Taj Mahal announced closing dates starting on November 13. Those dates were pushed back several times, including three separate dates in December.
$20 Million in Operations Cash
Eventually, investors controlled by Carl Icahn fronted the struggling Atlantic City casino $20 million to remain open. As the Trump Taj Mahal’s biggest creditor, it was in Icahn’s power to keep the casino open. During the same time, he was negotiating with Mayor Don Guardian of Atlantic City and the workers union at the Trump Taj Mahal, hoping for concessions that would make the casino’s business model more supportable. Those concessions never came.
Despite that, Carl Icahn continued to pursue a controlling interest in the gaming enterprise. U.S. Bankruptcy Judge Kevin Gross, whose court is located in Wilmington, Delaware, said at a hearing today, “The Taj will remain open. And it will be a successful venture.”
Debt Converted to Equity
The reorganization plan calls for the $292 million in debt the casino owed to Carl Icahn to be converted into equity. Also, he will provide the company with $13.5 million in operating capital to keep the operation running for the time being. In exchange, Carl Icahn gains control of the Trump Taj Mahal and the Trump Plaza.
While many details need to be worked out, Carl Icahn has most of the top figures on board with the decision. He struck a deal with unsecured creditors in February 2015. On Monday of this week, he came to an arrangement with Donald Trump and his daughter, Ivanka Trump, on a plan to keep the Trump brand name on the casinos.
Ivanka Trump on Icahn’s Control
To announce the agreement, Ivanka Trump, sent an email to her company’s investors which said, “I’m happy to have reached a deal with Carl–a friend and someone who my father and I have great respect for. The Trump Taj Mahal will, in short order, be greatly reinvested in and brought up to the high standard of luxury consistent with our brand and required under our license agreement.”
It is said that Ivanka Trump helped negotiate the deal. In doing so, Donald Trump dropped his lawsuit against Trump Entertainment Resorts. The lawsuit sought to get Trump’s name off the two Atlantic City casinos he had developed.
Political and Union Issues
Details with New Jersey officials and union leaders still need to be settled. The state of New Jersey had a PILOT tax plan in place for Atlantic City casinos, but a key politician spiked a vote on that plan in December 2014, because he did not want Carl Icahn to benefit from “corporate welfare”.
Also, the Trump Taj Mahal’s workers union is still fighting a plan Carl Icahn had to cut their health and pension benefits. The investor said it was the only way to keep the casino open.
About Carl Icahn
Not all of Carl Icahn’s business ventures have been a success, but he is seen by anyone who knows him as a competent, serious businessman. His history is full of major successes.
Icahn has a financial empire and has, at one time or another, held substantial or controlling positions in Viacom, Time Warner, Netflix, Western Union, Revlon, Nabisco, Texaco, Phillips Petroleum, Blockbuster, Marvel Comics, and Motorola. After his takeover of TWA in 1985, Carl Icahn became known as one of the new class of ruthless “corporate raiders” of the 1980s.
