Atlantic City – The Casino Control Commission Wednesday denied a request by the Tropicana conservator to defer payment of the largest fine ever imposed for regulatory misconduct.
Gary Stein, who is overseeing the sale of the casino, wanted the USD 750,000 penalty imposed Dec. 12 to be put on hold until the Tropicana sale closes. The commission fined Tropicana and its former owner, Columbia Sussex Corp., for failure to institute and maintain an independent audit committee as spelled out by the Casino Control Act.
Stein, a former state Supreme Court justice, is overseeing the operation, as well, in the wake of the commission’s Dec. 12 decision to deny the relicensing of the Tropicana under Columbia Sussex after a series of regulatory and operational missteps.
„The violations involved were most serious and a complete deferral of the obligation to coincide with the sale would only serve to diminish the gravity of the misconduct involved,“ commission chairwoman Linda Kassekert said in support of the denial.
The authority agreed to permit Tropicana to pay the debt in six monthly installments, the first due last month, but put that on hold until the commission rendered its decision on the deferral request. The installment plan — first payment comes due Friday — provides enough flexibility for Tropicana without placing undue financial strain, Kassekert said.
Stein said cash flow projections developed by consultant Gary Simpson through the end of June are more than adequate to make the necessary payments, but he preferred to keep the deferment option open to ensure sufficient liquidity to meet other obligations due in the coming four months, including USD 14 million for capital expenditures, USD 6 million in property taxes, USD 1.5 million in liability insurance and USD 3 million in state income tax.
„I am determined to maintain liquidity at a level that will allow the company to deal with unexpected contingencies between now and the sale,“ Stein said.
Added to that is the expense brought on from having to respond to a suit filed by the bondholders to find Columbia in default, a move which would accelerate repayment of a USD 960 million loan.
„The bondholders are determined to find a way to intervene in the sale,“ Stein said.
In his request, Stein also said Columbia Sussex was reluctant to make a payment until the court hears its appeal of the Dec. 12 ruling.
„Tropicana does not believe it should bear the entire burden of the penalty,“ he said.
Stein argued that the penalty, if deferred, would have no impact on whoever emerges as a buyer. The offer memorandum to potential suitors is in the marketplace. Though mum on particulars, Stein said in the past he hopes to have a contract signed by the end of April and a closing sometime in June.
Wednesday’s decision is just another cog in the process.
„In the long run, it doesn’t make a difference,“ he said.