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Could a burgeoning Atlantic City, N.J., casino rivalry between Carl Icahn and Arthur Goldberg have picked up some steam late last week? Dissenting bondholders of the bankrupt Claridge Hotel & Casino hope to find out. Despite a proposed, management-led reorganization plan that favors Icahn, U.S. Bankruptcy Court Judge Judith Wizmur late last week approved an application filed by the dissenters that would allow them to seek possible third-party bids for the casino. The prospect of such a search could open the door to a play by Goldberg’s Park Place Entertainment Corp., which recently lost out to Icahn in a bid to gain control of another bankrupt Atlantic City casino, Sands Hotel & Casino. “It makes sense completely,” Marvin Roffman, an analyst with Philadelphia-based Roffman Miller Associates, said about Goldberg becoming an interloper. “It would continue [Park Place's] dominance in the center of the boardwalk.” To assist in its search for bidders, the committee retained U.S. Bancorp Libra, a division of the Minneapolis-based U.S. Bancorp that specializes in high-yield securities and private placements. Wizmur’s order comes at a curious time. Claridge management’s plan, which would give Icahn control, will undergo a confirmation hearing Sept. 6 in her Camden, N.J., courtroom. The weeks leading up to that hearing could become even more rancorous than they’ve already been. “It could open up a Sands-style competitive bidding process,” said the dissenting bondholders’ attorney, Michael Viscount of the Atlantic City law firm of Fox, Rothschild, O’Brien & Frankel LLP. Certainly there’s cause for rivalry. Icahn’s Sands victory effectively quashed Goldberg’s plans to build a megaresort by combining the casino with a vacant lot next door. While Park Place is not a bondholder in the Claridge, it does control many of the Atlantic City boardwalk’s remaining jewels, such as the Bally’s Park Place Wild Wild West Casino. Conversely, Goldberg has not recently shown an interest in the 19-year-old facility. In fact, while Claridge’s management did not voice opposition to the bondholders’ request, it did state that no bidder had emerged since the dissenters’ committee was formed in May. Neither Icahn nor Goldberg could be reached for comment. Wizmur’s order puts another barrier in the road to what in the spring looked like a sure victory for Icahn. The dissenting bondholders hold about 20% of the hotel’s $85.1 million in first mortgage notes. They formed their committee in May to protest management’s plan calling for no debt to be included in the reorganized company. Under the plan, the bondholders would get stock. The group’s dissent has proven contagious. Icahn was unable to get the two-thirds of the debt class needed to back his plan last month. The result was a “cram-down,” in which a plan is effectively forced upon creditors and others in a bankruptcy. Federal bankruptcy law holds that in a cram-down situation, a winner must get the backing of an “impaired” class, or a group that isn’t made whole. Icahn got the critical endorsement of Claridge vendors holding $5 million in claims, who were the impaired class because they were not being reimbursed fully on their plans. Management’s current plan calls for Icahn to gain control of the company with a 36.1% stake, while giving his fellow bondholders the remaining equity in the company. Now it’s up the dissenting bondholder group to find a bidder to keep the Claridge sweepstakes going. Copyright �2000 TDD, LLC. All rights reserved.

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