Icahn pledges $20M to keep Taj open

A deal between billionaire Carl Icahn and the casino workers union in Atlantic City fell apart Thursday, but Icahn said he would spend $20 million to keep the bankrupt Trump Taj Mahal open past a looming Saturday closing date.

Icahn made his pledge in a letter posted on Twitter about an hour after Union President Bob McDevitt said Icahn had backed out of the deal. Icahn said he remained hopeful a deal could be reached and said he would spend up to $20 million to keep the casino open throughout bankruptcy proceedings.

The fast-moving developments extend an acrimonious three-month standoff that has threatened to close the sprawling Agra-themed casino resort, put 3,000 employees out of work, and turn the casino into the ultimate white elephant on the Boardwalk.

"We thought that we had come to an agreement with all parties," McDevitt, head of Unite Here Local 54, said in a statement around 1 p.m. "We signed it, and the Trump CEO signed as well."

But at noon Thursday, McDevitt said, "we were told that Carl Icahn had gone back on his commitment and would not enter in the agreement."

Under the tentative deal reached late Wednesday night, Icahn had given in to union demands, restoring health and pension benefits he had gone to court to revoke, and giving up on attempts at outsourcing and new work rules, including increased room cleaning quotas and the elimination of paid meal breaks.

In return, Unite Here Local 54, had said it would withdraw an appeal of the federal bankruptcy court ruling that allowed Icahn and Trump Entertainment to vacate the union contract.

Icahn, a secured lender who is poised to take ownership of the company, is also counting on a package of tax relief that had been scheduled to move through the state legislature Thursday.

In Trenton, however, Assemblyman Vince Mazzeo (D. Atlantic) said the five Atlantic City bills were being held "because Icahn didn't sign the contract to keep the Taj open."

"Icahn has to come to the table and make a deal," Mazzeo said.

In his letter, addressed to Trump Entertainment CEO Robert Griffin, who had pleaded with Icahn to float the casino into the new year, Icahn called the company "one of the most distressed companies I have ever come across in my 50+ years of investing."

The Taj Mahal had been scheduled to close at 5:59 a.m. Saturday, but Icahn's letter and $20 million pledge ends the immediate risk of closure. (Griffin had asked Icahn for $30 million.) It would have become the fifth of Atlantic City's 12 casinos to go out of business this year, joining Atlantic Club, Showboat, Trump Plaza and the Revel.

Both Icahn and union president took shots at the other and the negotiating process.

"This is what we have been dealing with for some time now at this property," McDevitt said. "We are disappointed that Mr. Icahn's whims are going to add to the feelings of uncertainty and instability that workers have had to live with and have to endure during this holiday season and beyond.

"We and everybody else thought we could start moving Atlantic City forward, but it is unfortunate that one person could put the brakes on all that."

Icahn, noting for not the first time that he "grew up in one of the roughest neighborhoods in Queens," stressed that he is "in no way 'anti-union.' "

"I respect people who want the opportunity to work hard and better their lot in life," he said in the letter. "It's also the reason why, despite some questionable decision-making from this union's leadership over the last few months, I remain hopeful that I will be able to reach a deal with them."

The 24-year-old casino at 1000 Boardwalk was to pass over to 78-year-old Icahn, a self-styled billionaire brawler who took over the Tropicana in 2009, invested his millions, and turned that casino into a profitable one that attracts roving bands of partying millennials on weekends and throughout the summer.

Icahn has promised to invest $100 million into the Taj Mahal to turn the flailing casino around, provided the state provides sufficient tax relief. The Taj Mahal, once the most profitable casino in Atlantic City, is still considered an attractive convention hotel with a favorable location across from the newly renovated Steel Pier, whose owners have opened pubs and are planning to build a large Observation Wheel modeled after the London Eye.

Icahn said he is contining to float the casino "even though I have no assurance that the State will provide aid or that the Union with drop its appeal."

"Even though I believe that Atlantic City will be great again someday, many people would still argue that it would be a better financial decision for me to let the Taj close," he wrote. "But I cannot be so callous as to let 3,000 hardworking people lose their jobs."

He said a deal with the union and state "which would enable us to turn the Taj around, as we've done with so many other failing businesses, remains a possibility."

There was no immediate response from the Union to Icahn's letter.

The Icahn-Local 54 battle had played out in public in a series of noisy protests staged by the union and in letters penned by Icahn and Trump executives pleading with the union to meet their demand to drop the appeal.

But in the end, the tentative deal was brokered by phone at the state level, led by Jon Hanson, Gov. Christie's point man on Atlantic City, and state Senate President Stephen Sweeney (D., Gloucester), who is ushering through legislation to satisfy the casinos and stabilize the city's finances.

Griffin, the CEO of Trump Entertainment, has said the bankrupt casino is losing $10 million a month. Icahn also controls the shuttered Trump Plaza, which is expected to be demolished and repurposed into an extension of the Tanger Walk Outlets and the soon-to-open Bass Pro Shops.

Griffin's last letter was to Icahn himself, begging for $30 million to keep the casino alive through the first few months of 2015 while the union pursued its appeal. Griffin was not expected to stay with the company.

A financial assistance package for Atlantic City's eight casinos and for the city's municipal finances was expected to be passed by the state Legislature as early as Thursday.

Source: Philly.com