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High Stake Deals in Atlantic City

10/17/2000

Atlantic City – the new playground for billionaire investors on the prowl

The New York Post declares: ?After 75 years, Atlantic City is again becoming a playground for the rich - this time, billionaires on the prowl for more bucks.?
Sun International Hotels Ltd. is currently negotiating the sale of its Resorts International hotel-casino in Atlantic City. South African gambling magnate Sol Kerzner's Sun International., which backed out of a deal to buy the Desert Inn hotel-casino in Las Vegas this year, is now in talks to sell Resorts International. Billionaire investment guru, Tom Barrack, chairman of Colony Capital LLC of Los Angeles, is negotiating for Colony to buy the property. Colony controls Harveys Casinos Resorts, a casino company based in Lake Tahoe, Nev. Harveys is presently buying casino operator Pinnacle Entertainment for $1.28 billion.
According to the Post, ??Casino analysts say the Atlantic City scramble has been triggered by the The Borgata, the $1 billion mega-casino being built in a joint venture by Boyd Gaming and MGM. Ground was broken last week for the 2,000-room casino, which will be Atlantic City's largest??
Barrack joins billionaire investor Carl Icahn, who's recently obtained the Sands and has his eye on the bankrupt Claridge. ?Also in the scramble for the Claridge is Icahn's newest business rival, casino king Arthur Goldberg, who runs the world's biggest gaming empire, Park Place Entertainment.? Barrack has been unsucessful in his attempts to buy Trump Hotels & Casino Resorts Inc. from Donald Trump and hopes this purchase will give him a foothold in a major gambling center.
Barrack hopes to buy the Resorts International hotel-casino at a discount from the more than $400 million that Sun International has invested in it, the Wall Street Journal reported, citing people close to Colony.

Kerzner, Sun International's chairman and majority shareholder, has struggled with the New Jersey property for several years -- beginning with a casino-licensing investigation in which New Jersey regulators questioned several of his former business deals in South Africa.
Some observers see the sale of the Resorts property as part of pattern in which Kerzner appears to be ending his bid to be a major player in the U.S. gaming industry. Besides dropping his bid for the D-I on the Las Vegas Strip, Kerzner's involvement in the giant Mohegan Sun Indian casino in Connecticut has been reduced.
Standard & Poors on Wednesday placed Sun International Hotels corporate credit, bank loan and subordinated debt ratings on CreditWatch with negative implications because of the Atlantic City sales talks.
S&P said a sale of Resorts to Colony would further increase Sun's reliance on its flagship resort, Paradise Island, which is in the Bahamas, increasing its contribution to Sun's cash flow from 77 percent to 90 percent, S&P said.

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