When the casino-hotel first went on the market a year and a half ago, the Tropicana was expected to fetch about $1 billion. Since then, the economy continued sliding and competition from racetrack slots parlors in other states has continued battering Atlantic City gambling houses.
"Value these days is difficult to assess," Judge Judith Wizmur said. "There is basically no other option available at this point."
Mark Giannantonio, president of the casino, said customers will not notice any difference in day-to-day operations while the deal is in the process of closing, which is expected to take several months.
"We will continue to deliver excellent service and first-class operations," he said. "We're excited about moving forward with the new owners."
Icahn once owned the Sands Casino Hotel in Atlantic City but sold it in 2006 to Pinnacle Entertainment, which imploded it and never built a replacement.
Oscar Pinkas, an attorney for Icahn, said the business mogul is pleased to acquire the Tropicana, but has not yet laid out plans for its future.
In addition to Icahn, the largest creditors in the group that won the Tropicana are Black Diamond Capital Management of Greenwich, Conn., and Schultze Asset Management LLC of Purchase NY, according to court documents.
The new owners must now get temporary approval from New Jersey casino regulators and obtain a full casino license, which could take a year. They also may need to form a new company to operate the Tropicana. That issue will be discussed next week at a meeting of the New Jersey Casino Control Commission.
Whether Giannantonio and other current Tropicana managers will be retained has not yet been determined, officials said.
The winning investors hold a $1.4 billion mortgage on the Tropicana. That enabled them to craft their offer in a way that competitors were unable to match.
They agreed to act as a so-called "stalking horse," laying down a bid in a bankruptcy court auction that set the floor for other bids. Because no one else exceeded it - no one else even bid - the stalking horse got the casino.
The investors offered $200 million of their debt for the casino. To beat their bid, another party would have had to offer more than $200 million in cash or securities.
This kind of low-ball offer has worked well for Icahn before. He bought the Sands out of bankruptcy in 2000 for $65 million and sold it in 2006 for $270 million to Pinnacle.
The Tropicana had to be sold because the New Jersey Casino Control Commission stripped its former owners, an affiliate of Kentucky-based Columbia Sussex Corp., of their casino license in Dec. 2007 for poor performance.
Initially, regulators and casino executives expected the Tropicana to fetch about $1 billion, and early offers came close, including bids of $950 million by a group of New York investors, and $850 million from Colony Capital LLC, which already owns two casinos here, Resorts Atlantic City and the Atlantic City Hilton Casino Resort.
Stein rejected those offers, claiming they were too low or questioning the financing behind them, and he started the process over.
In Sept. 2008, Baltimore-based Cordish Company, which built Atlantic City's popular retail shopping district, called The Walk, and helped revitalize Baltimore's Inner Harbor, offered $700 million in cash and notes, or $575 million in an all-cash deal. But Cordish took that offer off the table as the economy continued to worsen.
In March, the Icahn group made its $200 million debt-swap offer for the Tropicana.
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