$25M Minimum Bid Set in Atlantic Club Auction
The bidding for The Atlantic Club Casino Hotel in a bankruptcy auction next week will begin at $25 million.
That's $10 million more than the only deal the casino has been able to put together to sell itself when a sale to the PokerStars website fell through earlier this year. But, that deal would have seen PokerStars assume significant liabilities the casino has amassed, something that might not happen in the sale scheduled for Dec. 17.
Court documents in litigation between The Atlantic Club and PokerStars' parent company claim the casino has a $30 million employee pension liability. Court documents in the bankruptcy case list the casino's pension liability as "unknown."
Michael Frawley, the casino's chief operating officer, would not discuss specifics of the casino's finances, nor predict what it might sell for.
"We're following the process very closely and hope for the best," he said.
Atlantic City's southernmost casino filed for Chapter 11 bankruptcy protection last month after trying in vain to find a purchaser.
It has struggled to compete with newer, larger casinos, and targeted low-rollers and local residents as part of a value-pricing strategy that has enabled the casino to increase its revenues in recent months.
But the improvement did not come fast enough to stave off a Chapter 11 filing. Last week, the casino listed assets of $17.7 million, excluding real property, and liabilities of $16.8 million.
To this point, the lowest price ever paid for a casino in Atlantic City was the $31.5 million the Resorts Casino Hotel sold for in Dec. 2010.
Since then, two deals to sell casinos at lower prices have fallen through. The Rational Group, the British parent firm of PokerStars, offered $15 million for The Atlantic Club -- and actually gave the casino $11 million of that amount as advance payments to help it get through last winter, which is part of the ongoing litigation.
And Trump Entertainment Resorts struck a deal in February to sell Trump Plaza Hotel and Casino to the Downey, Ca.-based Marcelo Group for $20 million before that deal also fell through a few months later.
Billionaire Carl Icahn bought the Tropicana Casino and Resort out of bankruptcy court for $200 million worth of deeply discounted debt in 2010; the casino originally went on the market for about $1 billion when its former owners lost their casino license.
The Atlantic Club's owners, Los Angeles hedge fund Colony Capital, paid $513 million for it in 2005.
(Copyright 2013 by The Associated Press. All Rights Reserved.)