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Fearing a "fire sale" price would leave nothing left for it after debts are paid, the former owner of the Tropicana Casino and Resort says it will sue to block the proposed sale of the casino to a Baltimore developer.

 

Tropicana Entertainment LLC said Wednesday the proposed $700 million sale to The Cordish Company is less than the property is worth.

 

A state-appointed trustee tapped Cordish on Tuesday as a potential purchaser of the Tropicana in a bankruptcy court auction. Other parties can still submit higher bids for the property, which was stripped of its casino license last December after problems with cleanliness, service, and compliance with state gambling rules.

 

That prompted the appointment of a trustee to oversee the casino, which has remained open, and required that it be sold to a new owner.

 

Tropicana Entertainment is trying to regain control of the property - a move seen as a long-shot in this seaside gambling mecca.

 

"The purported price for the Atlantic City property understandably reflects a fire sale mentality on the part of prospective buyers who see an extraordinary opportunity in a depressed market, which creates a windfall at the expense of other innocent parties," said Scott Butera, Tropicana Entertainment's CEO.

 

He said the company "intends to pursue legal and other strategic alternatives to block that proposed sale."

 

Cordish has offered $700 million in cash and stocks to complete the purchase, subject to approval by the New Jersey Casino Control Commission and a U.S. Bankruptcy Court judge in Delaware.

 

But Butera questioned the value of stock being offered as part of the deal, and called on trustee Gary Stein, a retired state Supreme Court Justice, to make Cordish's entire offer sheet public so that the value of the securities can be assessed.

 

Stein declined comment Wednesday, and David Cordish, chairman of the company that bears his name, did not immediately return a message seeking comment.

 

Butera said that current economic conditions, coupled with a continuing downturn in the casino industry in New Jersey, and a mid-October deadline for selling the Tropicana, are producing "unreasonably low" offers for the property.

 

The proposed $700 million sale is well below the property's debt level, leaving nothing left for Tropicana Entertainment after a sale in bankruptcy court. Crestview Hills, Ky.-based Columbia Sussex Corp., a parent of Tropicana Entertainment, bought the company that owned Tropicana casinos in Atlantic City and Las Vegas in January 2007 for $2.1 billion.

 

But Butera said the company's primary motive in trying to block a $700 million sale is that it believes to price is too low. He would not say what the company believes it is truly worth, but said Tropicana Entertainment has a duty to its shareholders to maximize the value of its assets.

 

He also said the company still intends to press on with its effort to regain control of the Atlantic City casino, and noted a slew of management changes Tropicana Entertainment has made so far this year, including barring owner William Yung III from having any control over it.

 

"We have put the type of company in place that's able to be in good standing and operate the property efficiently," he said. "The company has changed in every regard except for its name."