The future of the Trump Taj Mahal appears stable, at least for the next year. This past weekend, Carl Icahn agreed to provide $20 million in financing to keep the Trump Taj Mahal operational during bankruptcy. The casino was scheduled to close on December 20.
When the deal was announced, parties failed to reveal how long the financing would keep the property open. According to a report in Reuters, the financing package could keep the Taj Mahal open for the next year. The downside is that if the package fails to get the casino out of bankruptcy, there may not be a backup plan.
Heading into December, the future of the Trump Taj Mahal looked bleak. Trump Entertainment had less than two months of cash on hand and Icahn was unable to get any assistance in keeping the casino open. Now the company has pulled off a Christmas miracle and will keep the casino open for the next year.
The future of the Trump Taj is in the hands of the bankruptcy court. According to the Reuters report, should the financing be approved by January 9, the casino will likely stay open through the winter until business picks up in the summer.
Deal Will Give Icahn and State Time
When the $20 million financing package was announced, most didn’t realize the true impact that the deal could have on both the Taj and Atlantic City as a whole. The package will allow Icahn and Trump Entertainment to continue negotiations with the Local 54 of UNITE HERE over their appeal of their cancelled contract. A deal between the union and the Taj was reportedly in play until the middle of last week when Icahn decided to back out.
The deal should also allow the New Jersey legislature to move forward with several bills that have been introduced to help revive the struggling Atlantic City economy. Among those bills is a proposal that will give tax breaks to all casinos similar to those that Icahn sought for the Taj.
A vote on these proposals was delayed last week when the deal between Icahn and the union fell through. Now that the Taj will stay open for the foreseeable future, there is little reason to delay a vote. A condition for receiving help from these bills is that casinos must offer health care and pension to full time employees.
No Backup Plan
The only downside to the new financing package is that it may be a last-ditch attempt to save the casino. According to lawyers with Trump Entertainment, this $20 million package means that Icahn’s initial offer to convert debt into owner equity is off the table. Icahn had proposed to take over the casino and invest $100 million into renovating the property. Lawyers didn’t say what Icahn’s plans were, but the initial package is off the table.