Pokerstars parent seeks court order on Atlantic Club deal
News on 7 May 2013
News on 7 May 2013
The latest developments in the failed attempt by Pokerstars parent The Rational Group to buy a New Jersey land casino created mainstream media headlines late Monday when the Isle of Man company was awarded a temporary restraining order stopping Atlantic Club owners Colony Capital LLC from entering into any acquisition deals on the casino for the next two weeks.
Rational accused Colony of bad faith and revealed some surprising figures on the agreed sale price – considerably lower than that speculated on by numerous industry observers in recent months.
The Associated Press news agency reports that Rational filed its complaint in a New Jersey court, claiming that the agreed price for Atlantic Club was $15 million, $11 million of which has already been paid over.
The complaint alleges that Colony used the expiration date on the agreement to back out of the deal and claim a further $4 million as a termination fee.
Such a situation would result in Rational being out of pocket $15 million with nothing to show for it in return, the court action points out.
Rational also claims that Colony demanded an additional $6 million to extend the sale contract for another 10 days during which they would still be free to seek a better offer from someone else.
Rational responded by offering to pay the remaining $4 million of the agreed sales price in return for extending the sale contract until approval could be obtained from New Jersey casino regulators, but Colony refused to accept the compromise.
Rational also revealed that it paid more than $224,000 to start work on a poker club inside the casino, and on upgrades elsewhere within it.
Officials from The Atlantic Club and Colony Capital declined comment Monday.
Rational Group communications exec Eric Hollreiser, said Monday that his company has funded Atlantic Club shortfalls throughout the winter season since October 2012, preventing its bankruptcy and the loss of over 1,800 jobs.
“The Rational Group remains entirely committed to resolving this situation, and to its investment in New Jersey, while it continues to diligently work on completing the required licensing process,” Hollreiser said.
The Rational – Colony deal to finalise the purchase of Atlantic Club by April 26 did not take into account how long it might take to assemble and submit the many documents and exhibits necessary to win approval from the Casino Control Commission, which was considered to still be months away from an examination of whether the Rational Group would qualify for a casino licence in New Jersey, Associated Press reports.
The American Gaming Association made an unprecedented application to intervene in Pokerstars’ licensing hearing, and is strongly opposed to the proposed purchase, claiming that Pokerstars-Rational is not suitable for licensing.
However, Rational revealed last month that Caesars Entertainment, a leading member of the AGA, had offered one of its properties to Pokerstars earlier this year .
Rational said in its court papers filed Monday that Colony approached them about a sale, stressing the casino’s “difficult financial situation” and “huge liabilities including more than $30 million in unfunded pension liabilities.”
The company said that the Atlantic Club repeatedly stressed that if a deal could not be reached quickly, the casino would declare bankruptcy, jeopardising 1,800 jobs.
Rational agreed to finance the casino’s losses while the application process was under way up to $750,000 per week to be counted against the eventual purchase price.
