Icahn to keep Trump Taj Mahal open
Billionaire investor Carl Icahn pledged $20 million on Thursday to keep Atlantic City's Taj Mahal casino open indefinitely, eliminating a plan to shut it down early Saturday.
In a letter obtained Thursday by The Associated Press, Icahn promised Trump Entertainment Resorts that he will provide enough money to keep the casino open throughout bankruptcy proceedings. It had been scheduled to close at 6 a.m. Saturday.
"Many people would still argue that it would be a better financial decision for me to let the Taj close and wait to see whether a global settlement can be reached," Icahn wrote to Trump Entertainment CEO Robert Griffin. "But I cannot be so callous as to let 3,000 hardworking people lose their jobs."
The news was part of a day that started out with the New York Post reporting a deal had been reached with the workers union, UNITE HERE Local 54, to keep Atlantic City's second largest casino open.
Early Thursday afternoon union president Bob McDevit posted a statement on their Facebook page with the news the deal was off. "At noon today, we were told that Carl Icahn had gone back on his commitment and would not enter into the agreement," reads the statement.
McDevitt said the deal had been signed by all parties involved including the CEO of Trump Entertainment when Icahn backed out. "We are disappointed that Mr. Icahn’s whims are going to add to the feelings of uncertainty and instability that the workers have had to live with and have to endure during this holiday season and beyond," wrote the union," McDevitt wrote.
A representative of the union, when contacted by Townsquare Media New Jersey, declined to comment further except to confirm the authenticity of the statement. However, McDevitt told the Associated Press that Ichan plans to let workers know he plans to keep the casino open indefinitely.
Icahn then posted a letter to Trump Entertainment CEO Bob Griffin that the Taj would stay open despite its many problems. "Trump Entertainment Resorts, Inc. is one of the most distressed companies I have ever come across in my 50+ years of investing. The company’s hometown of Atlantic City is in the midst of an unprecedented crisis" that led to four casinos to close.
The company plans to hand itself over to Icahn, but only if he gets substantial tax breaks. Bills that would have done so were yanked from the state Legislature on Thursday.
Earlier, the New York Post reports that Icahn agreed on Wednesday to the demands of Unite Here 54 and would restore all work rules at Atlantic City's second-largest casino. 3,000 Taj workers employed will continue on the job.
Global Gaming magazine analyst Roger Gros says the Taj staying open is good news for the moment but looks at the reality of what Icahn's "indefinite" support of the casino could be for only two months, pointing out that it loses $10 million per month. "It would be a big blow to the city" if the Taj closed according to Gros, who believes "a lot of people want it to stay open."
The union is pressing an appeal of an October bankruptcy court order that terminated health insurance and pension coverage for Taj workers. For months, the company has insisted that the union withdraw the appeal or else it would close the casino. But two threatened shutdown dates came and went, and the latest was less than two days away when Icahn decided to keep the Taj Mahal operating throughout the bankruptcy process.
Carl Icahn's Letter to Trump Entertainment CEO Robert Griffin
I received your letter requesting further aid and assistance in your attempts to keep the Trump Taj Mahal open, and I would like to respond.
I do not typically shy away from a challenge. In fact, I take great pride in my ability to successfully rebuild failing businesses. As you correctly pointed out, a few years ago I took a chance at the Tropicana by investing when others would not, and today the Tropicana is a profitable, viable casino that provides stable employment for almost 3,000 workers. In addition to gaming, I’ve also had tremendous success rehabilitating businesses in other industries, including oil and gas, metals and real estate.
But Trump Entertainment Resorts, Inc. is one of the most distressed companies I have ever come across in my 50+ years of investing. The company’s hometown of Atlantic City is in the midst of an unprecedented crisis. Intense competition from surrounding markets is steadily eroding gaming revenues for the city’s casinos. At the same time, relative to those surrounding markets, the costs of operating a casino in Atlantic City continue to escalate. As a result, four local casinos shuttered in 2014, and a once vibrant Atlantic City institution, your Taj Mahal, loses almost $10 million every month.
Despite all of that, and in part because of the tremendous integrity you have displayed throughout this difficult and arduous process, I took your letter to heart. I worked tirelessly with my team over the last few days – reviewing and re-reviewing the numbers you provided us, trying to find some way to help you keep the Taj operating. I also had countless discussions with representatives of the State and the Union, and at one point, I genuinely believed we were close to a global settlement. But ultimately, even though I committed to inject another $100 million of capital into the Taj, we could not get a deal done.
Now, I want to be clear that I am in no way “anti-union” (as some may suggest). I grew up in one of the roughest neighborhoods in Queens, and I’ve worked hard every day of my life to get to where I am. So I respect people who want the opportunity to work hard and better their lot in life, which is why I often have a good relationship with labor leaders at the companies I own. It’s also the reason why, despite some questionable decision-making from this Union’s leadership over the last few months, I remain hopeful that I will be able to reach a deal with them.
Even though I believe that Atlantic City will be great again someday, many people would still argue that it would be a better financial decision for me to let the Taj close and wait to see whether a global settlement can be reached. But I cannot be so callous as to let 3,000 hardworking people lose their jobs while a global settlement with the State and Union, which would enable us to turn the Taj around, as we’ve done with so many other failing businesses, remains a possibility. Therefore, even though I have no assurance that the State will provide aid or that the Union will drop its appeal, I will send you a commitment letter to provide you with up to $20 million of additional financing (in accordance with your budget and subject to the terms and conditions contained therein) to keep the Taj operating throughout the bankruptcy proceedings, and I will also commit to work collaboratively with the State, the City and the Union to try to forge a global settlement that will bring real stability to the Taj and its employees.
Press Statement from Bob McDevitt
“We thought that we had come to an agreement with all parties that would resolve all of the issues with the Taj Mahal. We signed it, and the Trump CEO signed as well. At noon today, we were told that Carl Icahn had gone back on his commitment and would not enter into the agreement. This is what we have been dealing with for some time now at this property. We are disappointed that Mr. Icahn’s whims are going to add to the feelings of uncertainty and instability that the workers have had to live with and have to endure during this holiday season and beyond.
We and everybody else thought we could start moving Atlantic City forward, but it is unfortunate that one person could put the brakes on all that.”
Joe Cutter and the Associated Press contributed to this report.