| Type | Subsidiary of Tropicana Entertainment |
|---|---|
| Industry | Gambling, Resorts |
| Headquarters | Las Vegas, Nevada |
| Key people | Scott Butera (CEO) |
| Website | www.tropicanacasinos.com |
Aztar Corporation is a hospitality company that focused on resort hotels and casinos. In 2005, the company had revenues of more than $915 million and earnings before interest and taxes of $212 million. During 2006 the company became the subject of a bidding war for ownership, with Columbia Sussex winning.
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In 1989 Ramada Inns, Inc. split its businesses, selling the hotel/restaurants to Hong Kong based New World Development Company for $540 million. The casinos including the Tropicana Atlantic City and the Tropicana Las Vegas were spun off into a new publicly traded company called Aztar Corporation.
In 1995 the new Aztar Corporation expanded its operations to include riverboat casinos in Caruthersville, Missouri and Evansville, Indiana. On March 5, 2002 Aztar acquired full ownership of the 34-acre (140,000 m2) Tropicana location in Las Vegas by purchasing the 50% share held by Chicago's Jaffe family. During 2005, the company acquired a site in Allentown, Pennsylvania with the intention of securing a gaming license and then developing a casino.
On March 13, 2006, Aztar announced plans to be acquired by Pinnacle Entertainment for $2.1 billion. Subsequent bids were made by Colony Capital, LLC, Columbia Sussex and Ameristar Casinos. As of April 26, 2006, all four companies were engaged in bidding over Aztar, with Pinnacle increased its bid to $45 per share, matching Ameristar's bid; Columbia Sussex had previously bid $47 per share.[1] Later, Columbia Sussex increased its bid to $50 a share, all in cash. Aztar management determined on May 1 that the latest bid was preferred over Pinnacle's late increase to $48 a share, in cash and stock.
On May 4, 2006, Ameristar announced that it was pulling out of the bidding for Aztar. Additionally, Colony has apparently lost interest, having failed to increase its bid beyond $41 a share and making no public comment for several weeks. Since Columbia Sussex eventually outbid Pinnacle, the latter company was paid a $50 million termination fee plus expenses, which may total $16 million.[2]
Bidding ended on May 19, 2006 with the acceptance of a $2.75 billion bid from Columbia Sussex. Columbia Sussex paid a $313 million breakup fee in advance, in case the deal fell through with $78 million of that used to pay the breakup fee to Pinnacle Entertainment.
The sale was approved by the Nevada Gaming Commission on November 16, 2006, and shortly thereafter by regulators in New Jersey and Indiana.
On December 4, 2007, the New Jersey Division of Gaming Enforcement recommended to the Casino Control Commission that it approve the relicensing of the Tropicana and find Columbia Sussex suitable as an owner with a few provisos. Under the recommendation, the casino license would be for only one year instead of the customary five years, and the Tropicana would have to provide New Jersey regulators with advance notice of proposed layoffs, disclose any of the company's gaming violations in other states, report details of its debt agreements, and maintain an independent audit committee. On December 12, 2007, the New Jersey Casino Control Commission rejected this recommendation by a 4 to 1 vote and denied the application of renewal for the Tropicana casino. The commission cited the management's "abysmal" regulatory compliance as well as a "lack of business ability...financial responsibility...and a lack of good character, honesty, and integrity." The property was immediately placed in control of a trustee - New Jersey State Supreme Court Justice Gary Stein - until the property can be sold. This is only the second time in 29 years that the commission has denied a license renewal.[3] Lawyers are expected to appeal.[4] The casino will continue to operate, but it will be under the supervision of a trustee.[5]
The hotel and casino remain open and operations will not be affected.[3]
The company was a wholly owned subsidiary of Columbia Sussex until May 5, 2009 when it received approval from a Delaware Bankruptcy Court to reorganize and emerge from bankruptcy with the bondholders taking control of the company.[6] Under the terms of the court approved agreement, which requires approval from gaming regulators in New Jersey, Nevada, Indiana, Louisiana and Mississippi, the company will be split in two. One part would be the Tropicana Resort and Casino. The other part would own the remaining casinos.[7]