Carl Icahn's company struck an approximately $1.85 billion deal Monday that would fuse the gambling and hotel operations of Tropicana Entertainment to Eldorado Resorts Inc. The company revamped Tropicana's management team, hiring Tony Rodio as chief executive, and reinvested "every single penny" of profits back into the company, Mr. Icahn said in prepared remarks.
Icahn Enterprises announced Monday that it reached a deal to unload its majority-owned Tropicana assets for about $1.85 billion US.
Billionaire activist investor Carl Icahn gives an interview on FOX Business Network's Neil Cavuto show in New York February 11, 2014.
Eldorado intends to fund the transaction consideration of approximately $640 million payable by Eldorado and repay debt outstanding under Tropicana's credit facility with cash generated from its current operations, proceeds from pending asset sales, Tropicana's cash on hand, cash flow generated from Tropicana operations through closing and $600 million of committed debt financing from J.P. Morgan.
"The acquisition of seven Tropicana Entertainment properties will allow Eldorado to enter two new gaming jurisdictions and deliver additional financial and geographic diversity to our operating base", said company chairman and CEO Gary Carano.
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This is a developing story. Mr. Icahn has chaired Tropicana's board since 2010.
The $1.85 million deal also included the sale of Tropicana Real Estate, including the Atlantic City property, to Gaming and Leisure Properties Incorporated. The other properties are in Indiana, Louisiana, Mississippi, Missouri, and New Jersey. Overall, the Tropicana portfolio is in good shape and we have no immediate significant capex plans for the properties.
The transaction doesn't include Tropicana Aruba Resort.
Eldorado will enter a master lease agreement with Gaming and Leisure Properties, initially paying rent of $110 million to operate the acquired hotel-casinos in the first year. That casino recently became the No. 2 casino in Atlantic City in terms of gambling revenue, trailing only the Borgata.
Additionally, Icahn previous year sold the Trump Taj Mahal in Atlantic City to Hard Rock International, which is redeveloping the site as the Hard Rock Hotel & Casino Atlantic City.