Trump Taj Mahal will stay open into 2015, thanks to a loan from chief investor Carl Icahn. Erez Gilad, attorney for Trump Entertainment Resorts Inc, appeared in the courtroom of U.S. Bankruptcy Judge Kevin Gross to inform the court of the last-minute deal, which had been speculated on for quite some time.
Mr. Gilad says that the $20 million will keep the casino open through Christmas and into the New Year. In fact, reports surfaced in the last couple of days that Icahn might keep the casino afloat throughout 2015. It appears that Atlantic City will escape 2014 with only 4 of its 12 operating casinos closed.
Commitment Signed by Icahn
The $20 million cash infusion had been known for several days, though final word was not revealed until the weekend. On Sunday evening, a commitment was signed by Icahn to deliver the twenty million in cash.
Though Icahn has made several demands in order to take advantage of the leverage he has in being the man with the money to keep the casino open, the activist investor continues to relent in the moment of crisis. It's clear that Carl Icahn does not want the Trump Taj Mahal to close its doors, so he continues to invest more capital in the property.
Delaware Court Approves Deal
Erez Gilad appeared in the court in Wilmington, Delaware to ask for permission from the bankruptcy judge for the casino to stay open. Gilad told the court the $20 million commitment "enables us to request, of course, to remain open and not have to close on the eve of Christmas."
The announcement should come as a relief to most of the 3,000 workers at Trump Taj Mahal. The staff had been told for weeks that their jobs might end at any given moment. While time was ticking down, Carl Icahn was negotiating with the casino's workers union on a plan that would cost the workers their health and pension benefits.
Judge to Make Final Decision in January
In January 2015, Judge Gross will consider the $20 million offering in full. The judge has noted that the sum of money is not likely to keep the casino in operation through what is expected to be a tumultuous 2015. The payment is a sign that Carl Icahn is willing to continue subsidizing the Trump Taj Mahal in the near-future, as he is owed about $280 million by the casino in previous investments.
Since bankruptcy was declared in September 2014, disputes have erupted over who is going to subsidize the Trump Taj Mahal's long climb out of debt. Carl Icahn has wanted the workers of the casino to agree to a benefits cut, which would largely pay the cost of pulling out of bankruptcy. This resulted in load public demonstrations in October, in which the worker protests shut down traffic in central Atlantic City. Icahn, an activist investor who is no stranger to bankruptcy takeovers and other controversies, subsequently won a judge's order temporarily taken away the health and pension benefits of the Trump Taj Mahal's workers.
No Tax Breaks on the Horizon
Trump Entertainment Resorts and Icahn have called for Atlantic City to offer tax breaks for the casino. Mayor Don Guardian declined to do so, given the city's own $70 million budget deficit, which is largely caused by the loss of casino revenues over the past year. As the deadline approached, New Jersey's state legislature discussed its own plans for bailing out the troubled casinos of Atlantic City, by offering a smaller and more rigid tax structure for the coming 10-plus years.
Under that plan, Atlantic City casinos would pay $150 million a year in tax liability for the first two years, then $120 million per year over the next 13 years. The legislature decided to shelve such talks as Icahn and the workers union failed to make an agreement. The deal is likely to be resurrected, now that Carl Icahn has offered to bankroll the casino.
Icahn's Commitment to Trump Taj Mahal
Ultimately, Carl Icahn has signalled he is unwilling to talk away from his massive investment. If the Trump Taj Mahal is saved, Icahn is likely to be the man behind operations.
