Cue dramatic plot twist music. In a pair of developing stories over the weekend, all is not lost for the Revel and the Trump Taj Mahal. Brookfield Asset Management had announced last week that they were walking away from the Revel deal, but now there’s a chance that the parties will negotiate. Also, billionaire Carl Icahn looks to be willing to deal with the union and claims the Taj will remain open if they do.
On Friday, Philly.com reported that bankruptcy attorneys are holding a meeting on Monday to discuss the Revel deal. However, bigger news hit on Saturday when Carl Icahn offered concessions to the union that included the restoration of their health care provided they drop their appeal. He claims that the Taj will remain open if they agree.
Revel Deal Not Dead Yet
Revel’s bankruptcy attorney is going to make an effort to save the deal between the defunct casino and Brookfield Asset Management. Brookfield walked away from the $110 million deal last week when the casino’s power provider, ACR Energy Partners LLC., would not negotiate on existing construction debt.
Attorney John K. Cunningham told Judge Gloria Burns on Friday that, “I’m going to make a request to Brookfield to be there. All I can do is try.” According to Cunningham, Revel hasn’t received official notice from Brookfield that they are backing out of the deal. He also told Burns that communication lines remain open between Revel and Brookfield attorneys.
The issue at stake is $118.6 million in bonds held by ACR. Revel is scheduled to pay $20.1 million annually on this debt as well as $4 million annually for maintenance and operations. There are also variable costs that go above these figures. Judge Burns has recommended mediation to solve the issue, but ACR bondholders believe that the dispute is commercial in nature and a mediator is not necessary.
Should ACR choose not to negotiate and Brookfield walk away, this would open the door for Florida real estate mogul Glenn Straub to purchase the property. He is the backup bidder at $95.4 million, but he could choose to request a new auction for the property.
Icahn Offers Full Health Care and Partial Pension Restoration to Save Taj
In the “didn’t see that coming” department, Carl Icahn has made a fundamental shift in his bid to save the Trump Taj Mahal. Bloomberg and others reported on Saturday that Trump Entertainment sent a letter to union officials requesting that they drop their appeal of a court ruling that would cancel the union contract. In exchange, the Taj would agree to restore full health care to union workers and contribute 81 cents per hour worked toward an employee pension plan.
In a revealing statement from Trump CEO Robert F. Griffin, he told the union that they have made “significant progress in our discussions with representatives of the state and local governments on a package of property tax relief and other incentives, which gives us confidence that we will be able to keep the Taj Mahal open if you accept the following proposal.”
Just a week ago, U.S. Bankruptcy Judge Kevin Gross told the company that they needed to justify their positions of control at Trump Entertainment or risk having the company turned over to a trustee to begin liquidation. A hearing on this matter is scheduled for December 4.
Icahn has been pushing a program that would see him receive up to $175 million in local and state aid to save the Trump Taj Mahal. He would convert first-lien debt into equity and become the official owner of the property. Afterwards, he plans to invest $100 million into the property for improvements and renovations.
At present, the Trump Taj Mahal will close on December 12 and 3,000 employees will lose their jobs. Giving up union work health care and pensions would have only saved the company $14 million and the move made local and state officials resistant to helping the casino. Backtracking on this issue could well save the casino and stop the bleeding in Atlantic City, at least for now.