Billionaire investor Carl C. Icahn said Friday he has agreed to buy a majority of the first-lien bank debt of Trump Entertainment Resorts Holdings, which owns three resorts in Atlantic City, N.J.
The deal is part of a bankruptcy reorganization plan Icahn negotiated to help the troubled casino company emerge from bankruptcy.
Trump Entertainment filed for bankruptcy protection in February, the third such filing for the company or its corporate predecessors. The company owns Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino.
The deal was negotiated with Beal Bank and Beal Bank Nevada, which are headed by Donald Trump's friend Andy Beal.
Icahn said the plan offers the casino company the ability to weather current economic turmoil with no debt.
Details of the transaction were not released, and Icahn said in a telephone interview he didn't want to release the amount of money he paid.
Icahn said he and Beal Bank will work together to complete a plan of reorganization presented to the bankruptcy court for approval.
Beal said Icahn was contacted for his extensive experience in the gaming industry and turning around troubled companies.
"We think that this team now has all of the tools necessary to quickly and successfully emerge from bankruptcy and rebuild a best-in-class operation," Beal said in a statement.
Icahn has restructured troubled gaming companies before. He combined several bankrupt casinos to form American Casino & Entertainment, which was sold in 2008 for more than a $1 billion profit, he said in a statement. He now is working on restructuring Tropicana Entertainment and the Fontainebleau Las Vegas.
"I believe that, while Trump's operations in Atlantic City have potential, the economic uncertainty, changing competitive landscape, and Trump's two bankruptcies in five years demands a measured and conservative approach, including minimizing both outstanding debt and the likelihood of a third bankruptcy," Icahn said in a statement.
Donald and Ivanka Trump, who resigned from the company's board two days before it filed for bankruptcy, tried to buy the company themselves and take it private. They were offering $114 million with Beal Bank, and were locked in a battle with bondholders for control of the company.
But Trump switched sides last month, saying the company's reorganization plan was mired in expensive litigation that made a successful outcome unlikely.
He is not involved in the Icahn and Beal Bank proposal.
The company had been struggling with crushing debt that became even more painful when the economy soured and competition from slots parlors in Pennsylvania and New York increased, siphoning away some of Atlantic City's best customers by offering them places to gamble closer to home.