Trop owner fights back - Business

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Mar. 05, 2008
Copyright © Las Vegas Review-Journal

Trop owner fights back

Columbia Sussex files brief in N.J.

By ARNOLD M. KNIGHTLY
REVIEW-JOURNAL

Columbia Sussex Corp. is not leaving New Jersey without a fight.

The Fort Mitchell, Ky.-based operator filed a 62-page brief with the New Jersey appellate court Tuesday asking that the New Jersey Casino Control Commission's Dec. 12 decision to not renew the company's gaming license to operate the Tropicana Atlantic City be overturned.

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The brief accuses the commission of abusing its regulatory discretion and of not remaining neutral during the licensing hearings.

Columbia Sussex spokesman Hud Englehart declined further comment.

Commission spokesman Dan Heneghan said Columbia Sussex was expected to contest the decision and regulators will respond by the April 4 deadline.

"This brief was just filed today so the commission has not had the opportunity to review it yet," Heneghan said. "When it does, the commission will file its response."

The brief alleges the commission ignored facts about the company's financial stability and business operations.

New Jersey gaming authorities denied the license after deciding the company failed to meet the state's strict licensing requirements. Commissioners said the company showed "a lack of business ability, a lack of financial responsibility and lack of good character, honesty and integrity."

Columbia Sussex said the regulators gave "unwarranted credence to severely overstated customer complaints" and gave no weight to the property's 94 percent occupancy rates.

According to the brief, the property received just 71 complaints from registered customers in a period covering 369,000 room nights.

The company also invested $30 million in improvements to the property in its 11 months of ownership.

The brief also said the commission rejected the license because of complaints about the Tropicana's audit committee structure even though the regulators had previously approved the structure.

The appeal comes while a New Jersey conservator is proceeding with the property's sale to another owner.

Investment bank Bear Stearns, which is assisting former New Jersey State Supreme Court Justice Gary Stein with the sale, has begun contacting parties that have expressed an interest in purchasing the 2,100-room hotel-casino.

Stein wants to complete the sale by the end of April with a closing by the end of June.

Wachovia Capital Markets gaming analyst Dennis Farrell Jr. said the most "advantageous outcome" for Columbia Sussex would be if the sale didn't happen "due to the fact that they would not be forced to sell an asset in a difficult credit market which could impact the valuation of the sale."

Englehart declined to speculate on how the appeal could affect the sale.

The Tropicana, which is now operating under state control, has started rehiring some of the laid-off workers and has launched a campaign to repair its image.

The brief comes while Columbia Sussex is dealing with a Feb. 29 ruling in Delaware Chancery Court that was considered a win for the company's bond and high-yield debt holders.

The court declared an "event of default" and Columbia Sussex principal owner William Jung III has until the end of the month to negotiate new terms with bond and high-yield debt holders or he could be forced to restructure the company.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or (702) 477-3893.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. God is watchin wrote on March 05, 2008 12:02 PM: another article resulting in money all the the sake of GREED!!!!! Doesn't anyone read the bible anymore? County officials sleeping again. Just ignore it and the people will forget. LittleBird wrote on March 05, 2008 10:08 AM: It seems like it is taking the County a long time to do their figuring on Harrahs'penalty.Maybe they think if they take long enough,we will forget.The longer it takes ,the more embarrassing it will become for the County and Harrahs'.This is sure not the way for either entity to instill trust back into the community. charles wrote on March 05, 2008 09:50 AM: Good for Jersey. Being an ex Jerseyan, and familiar with the gaming commission, Nevada has none, and has no standards either. The casinos roam free, make their payoffs or donations, and run all of Clark County. Every panel member here has ties or is loosely on the payroll of some gaming joint, and puts every tourist at risk with their ever shoddy construction and expansion. If there were any ethics here, Tropicana would be closed here as well. The property other than the casino of course is a dump, carpeting that actually is worn out and stinks, not enough staff, and has had every penny extracted from it by the current owners. And they have no plans to upgrade or modernize, just run it further in to the ground. Good job Nevada, keep up the great inspections you do... Fred Frazzetta wrote on March 05, 2008 06:10 AM: New Jersey gaming authorities denied the license after deciding the company failed to meet the state's strict licensing requirements. Commissioners said the company showed "a lack of business ability, a lack of financial responsibility and lack of good character, honesty and integrity." Harrah's Entertainment, Inc. is sure lucky that they didn't pull their illegal remodel work in New Jersey - looks like they might have lost their gaming license for having left public fire safety hazards in thousands of their rooms for their valued guests. Maybe the gutless, inept Nevada Gaming Commission should learn the definitions of good character, honesty & integrity because obviously they are lacking on all three counts. Why do we even have a Gaming Commission?...they just do what they are told by the Casinos here in Nevada! I think one of our Gaming Commissioners (the good little sheep that he is) said something about they would consider (just consider?) taking action against Harrah's Entertainment, Inc. only if it is found that they willfully illegally remodeled their hotel rooms. Harrah's has only been doing their illegal remodels since 1992, but you are right Mr. Commissioner they probably didn't realize they were breaking the law and compounding the problem by making every room they touched another unsafe resting place for their guests! I guess because our illustrious Nevada Gaming Commission has no ethics themselves we can't expect them to police companies that exhibit their same qualities. Do the Gaming Commissioners get thank you jobs from the Hotels after they finish doing such a great job for them while in office - where they pretend to watch out for the public, but they are really pulling for the Casinos? The Nevada Gaming Commission is a joke, a farce, and an embarrassment to not only Nevada but to itself! takeemaway wrote on March 05, 2008 02:57 AM: Stand by your guns New Jersey. Nevada Regulators should have NJ standards!