Carl Icahn has blasted a representative for a Trump Taj Mahal Casino Hotel workers union, asserting he is willing to step in to save the casino when no one else will.
In a Tuesday, Nov. 25, open letter, Icahn, a first-lien lender to Taj Mahal owner Trump Entertainment Resorts Inc., said he is willing to restore healthcare to Unite Here Local 54, which represents Taj Mahal workers, for two years.
Icahn also said he would create a new pension plan if Local 54 withdrew its appeal to Trump Entertainment's rejection of an existing CBA with the union.
Icahn said he is willing to swap his debt for equity in the reorganized Trump Entertainment, and provide $100 million in new capital, if he gets certain tax concessions.
Directly addressing Local 54 president Bob McDevitt, Icahn wrote: "Bob – As you know, this is a bad investment for me at this time, evidenced by the fact that no one else is willing to invest even a dime. I thought the company's proposal and my agreement to support it would give the union what you wanted so that we could move forward. All that is being asked of you is to withdraw your appeal. I'm amazed that the union is unwilling to agree to a company proposal that restores two years of healthcare, provides a new pension, keeps the Taj open and saves 3,000 jobs ... if you just withdraw the appeal and give us labor peace."
More than 1,500 casino workers marched in Atlantic City last week to protest the actions of Icahn.
"Amid casino closings and mass layoffs in Atlantic City, billionaire Carl Icahn has done well while others have suffered," Local 54 said in a Nov. 19 statement.
The debtor has said it intends to close the Taj Mahal by Dec. 12.
The union alleged Icahn has already pulled $350 million out of Trump Entertainment and has "used the bankruptcy process to gain control of casinos at steep discounts, while lending at 12% interest rates."
Calls to Trump Entertainment, Local 54, debtor counsel Kristopher M. Hansen of Stroock & Stroock & Lavan LLP, and counsel to the official committee of unsecured creditors, Karen A. Giannelli of Gibbons PC, were not returned. Counsel to the first-lien lenders, Allan S. Brilliant at Dechert LLP, also could not be reached for comment.
Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware in Wilmington, meanwhile, is set on Dec. 4 to decide if he will convert the debtor's case from Chapter 11 to Chapter 7. At the same hearing, Gross also is scheduled to weigh a motion from the creditors' committee to terminate Trump Entertainment's exclusive right to file a Chapter 11 plan.
In a Nov. 19 order, Gross wrote the Atlantic City, N.J., debtor and its bankrupt affiliates are "facing continuing loss to and/or diminution of their estates and, although repeatedly promised, are continuing to operate without debtor-in-possession financing without which there is no reasonable likelihood of rehabilitation."
The judge said the case's main players — the debtor, the creditors' committee, secured lenders and Local 54 — "must negotiate with the understanding that there is urgency and an endpoint to their finding common ground."
In a second amended joint reorganization plan filed Nov. 14, Trump Entertainment said its board of directors had voted to shutter the struggling Taj Mahal "due to the fact that the debtors had not obtained the tax relief and incentives they sought and did not expect that they would receive assistance prior to the confirmation hearing." The company had sought $175 million in tax breaks from Atlantic City.
The updated plan includes mention of a debtor-in-possession loan that would be provided by Icahn's Icahn Agency Services LLC. Trump Entertainment did not include an amount or terms for the potential DIP in the document.
Under the latest plan, the lenders would receive 100% of the equity in the reorganized debtor and would provide a $13.5 million term exit loan; if the Taj Mahal remained open, the five-year exit loan would increase to $100 million.
The reorganized debtor would operate no casinos if the Taj Mahal shut down, as Trump Entertainment closed its smaller Trump Plaza Hotel and Casino on Sept. 16.
News of the pending Taj Mahal closure came a month after Trump Entertainment won approval to reject a collective bargaining agreement with union workers at the casino. Gross on Oct. 17 signed an order clearing the way for the debtor to reject a CBA with Local 54.
In a Sept. 26 motion, Trump Entertainment had said that tossing the CBA would allow the company to cut costs and continue operating the Taj Mahal and ultimately pursue a reorganization plan. The debtor had claimed that it paid $14 million to $15 million annually in pension and other benefits under its Local 54 CBA.
The union has since appealed the decision.
Trump Entertainment and seven affiliates filed for bankruptcy on Sept. 9, citing declining gaming revenue in New Jersey, crushing first-lien debt and competition from new casinos in neighboring states.
The Taj Mahal, which sits on more than 30 acres of beachfront property, has more than 2,000 hotel rooms, about 162,000 square feet of gaming space, an entertainment complex known as Xanadu Theater, restaurants and a gentleman's club.
The Plaza is at the center of the boardwalk in Atlantic City and had more than 900 hotel rooms, 1,600 slot machines, 18,000 square feet of conference space, a cabaret theater, multiple restaurants and retail outlets.
In court papers, Trump Entertainment unit Trump Entertainment Resort Holdings LP listed $336.83 million in assets and $292.37 million in liabilities. Trump Entertainment listed no assets and $292.26 million in liabilities.
Erez E. Gilad and Gabriel E. Sasson of Stroock & Stroock and Robert F. Poppiti Jr., Ian J. Bambrick and Ashley E. Markow of Young Conaway Stargatt & Taylor LLP are also debtor counsel. William Hardie, Jay Weinberger and Drew Talarico of Houlihan Lokey Inc. are Trump Entertainment's financial advisers.
Natasha M. Songonuga and Mark B. Conlan at Gibbons and Nathan A. Schultz of the Law Office of Nathan A. Schultz PC also represent the creditors' committee. Atlantic City Linen Supply LLC, Bally Gaming Inc., Conner Strong & Buckelew Cos., Local 54, South Jersey Paper Products, Thermal Energy LP I and the Unite Here National Retirement Fund sit on the committee.
Joseph J. Rhoades and Stephen T. Morrow of the Law Offices of Joseph J. Rhoades, William T. Josem of Cleary, Josem & Trigiani LLP and Kathy L. Krieger, Evin F. Isaacson and Darin M. Dalmat of James & Hoffman PC represent Local 54.
Craig P. Druehl and Shana White of Dechert and Robert J. Dehney and Andrew R. Remming of Morris, Nichols, Arsht & Tunnell LLP also represent the first-lien lenders.