Icahn rep: Will be ‘conservative’ at NJ Tropicana

ATLANTIC CITY, N.J. — The new owners of the Tropicana Casino and Resort plan to take “a pretty conservative approach” to spending money on additions to the gambling hall, a company official said Monday.

A group of investors led by billionaire Carl Icahn recently acquired the bankrupt casino by buying its $200 million worth of debt for just 27 cents on the dollar.

At a hearing before the New Jersey Casino Control Commission, Kenneth Shea, managing director of Icahn Capital LP, said the company will not rush into any expansion once the deal closes later this year.

“We are taking a pretty conservative approach on capitalization going forward,” Shea said. “I don’t think the economy is out of the woods yet. I don’t give a lot of credence to the green shoots that people think are out there. The consumer is still fundamentally broke.”

The Icahn group emerged as the winner in a-year-and-a-half effort to sell the Tropicana when the commission stripped its former owners of their license in December 2007.

Shea said Icahn, who owns more than 40 percent of the company, initially passed on the Tropicana in July 2008, when its debt was trading at 80 cents on the dollar. By November, it was down to 27 cents on the dollar, and Icahn swooped in.

“That’s when we decided it was an interesting investment opportunity,” Shea said.

The casino commission heard testimony Monday on a request by Tropicana Entertainment LLC, the former corporate owners of the casino, to return to Atlantic City and operate the business under Icahn’s ownership. At issue is whether hotelier William Yung III retains any influence over the company.

Yung’s management and cost-cutting measures were key reasons the casino commission stripped the affiliate of his hotel company, Columbia Sussex Corp., of its casino license. Shortly after taking control of the casino in January 2007, Yung began slashing jobs — nearly 1,000 in all. His decision left the casino understaffed and dirty.

As part of its effort to regain control of the casino, Tropicana Entertainment brought in new management, and got Yung to resign from the board and sign away all future rights to appointing managers there.

If the commission is not satisfied that all ties to Yung have been cut, the panel could force the Icahn group to set up a new company to run the casino.

Vincent Intrieri, senior managing director of Icahn Enterprises, said the firm prefers to have Tropicana Entertainment — which it now owns — re-qualified to run the casino. He said that would save money and enable Icahn to cross-market the Atlantic City Tropicana with its casinos in Nevada and elsewhere.

The commission did not say late Monday when it would make a decision.