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Resorts International

Summary

Resorts International was a hotel and casino company. From its origins as a paint company, it moved into the resort business in the 1960s with the development of Paradise Island in the Bahamas, and then expanded to Atlantic City, New Jersey with the opening of Resorts Casino Hotel in 1978. After the death of its longtime chairman, James Crosby, in 1986, the company was briefly controlled by Donald Trump, before being acquired by Merv Griffin in 1988. It was acquired by Sun International in 1996.

History edit

Development in Bahamas and Atlantic City (1958–1986) edit

In 1958, the Mary Carter Paint Company, a New Jersey paint manufacturer, was acquired by a group of investors.[1] James Crosby, son of one of the investors, was appointed to lead the company.[2]

With its paint business on the decline, Mary Carter sought to diversify into the land development business.[3] It acquired 1,200 acres of land near Freeport, Bahamas in 1962, followed by a 75 percent interest in Paradise Island in 1966.[3] The company built a bridge to the island and developed it with hotels and restaurants, and opened the Paradise Island Casino there in 1967.[4] In 1968, Mary Carter sold its paint division and changed its name to Resorts International.[1][5]

Other ventures that the company undertook were short-lived, including ownership of the Biff Burger fast food chain from 1962 to 1976,[6][7] an investment in an experimental shrimp farm in Mexico in the early 1970s,[7][8] ownership of the Marine World/Africa USA theme park in California from 1972 to 1979,[9] and an aborted deal to purchase half of slot machine maker Williams Electronics in 1978.[10]

Crosby led Resorts on several forays into the airline industry over the years.[11] The company made efforts towards acquiring Pan American World Airways in 1969, but backed down after Congress intervened to make such a takeover more difficult.[12] Resorts purchased Chalk's International Airlines, a small airline offering seaplane service between Florida and the Bahamas, in 1974;[13] the company would operate the airline until selling it in 1991.[14]

 
Resorts Casino Hotel in Atlantic City, as seen in 2009

Resorts executives traveled the world looking for potential casino sites.[1] Finally, Resorts took an interest in Atlantic City, New Jersey in the lead-up to a 1976 voter referendum to allow casino gambling there.[4] The company purchased large tracts of land in the city, including the historic Chalfonte-Haddon Hall.[4] When the referendum passed, Resorts was prepared to quickly renovate the hotel, opening it in 1978 as the city's first casino, Resorts International Casino Hotel.[2][4] The property was an immediate success, and the company saw its revenue increase from $59 million in 1977 to $407 million in 1979.[4]

Resorts expanded its footprint in the Bahamas to a second casino in 1978, assuming management of El Casino in Freeport.[15][16] It sold the casino in 1983.[16]

The company in 1983 began construction of the Taj Mahal casino, adjacent to the Resorts International casino, with an estimated budget of $250 million.[17][18]

The Resorts Casino Hotel had seen declining profits after 1979, as it faced competition from newly opened Atlantic City casinos, and a general slump in the casino industry.[4][11] The need to diversify was again apparent.[4] The company offered to purchase Trans World Airlines in 1985, but was rejected.[19][20] Resorts then returned its focus to Pan Am, buying an 11 percent stake in the airline.[7] By early 1986, Resorts was reported to be exploring expansion options in West Virginia, Florida, and Louisiana, where it was participating in lobbying efforts to legalize gambling, and searching for potential casino sites.[21][22][23]

Post-Crosby and Donald Trump era (1986–1988) edit

 
 
Merv Griffin (left) and Donald Trump (right) battled for control of the company in 1988

Crosby died unexpectedly in April 1986, and Resorts International became a takeover target.[24] The Taj Mahal had encountered construction problems, and Crosby's heirs, lacking experience in large development projects, doubted their ability to complete it successfully.[25] Real estate developer Donald Trump, who owned two Atlantic City casinos, beat out several other bidders to purchase a controlling stake in the company from Crosby's family for $79 million in July 1987.[26] Trump was appointed chairman of Resorts International, and said he would complete the Taj Mahal in about a year.[26]

As the Taj Mahal's budget had ballooned to $930 million, Resorts struggled to find the financing to complete it.[27] With the company claiming to be near bankruptcy in early 1988, Trump made a tender offer to buy all outstanding stock for $22 a share, stating that he was willing to personally finance the construction, but only if he owned the entire company.[28] Television producer Merv Griffin made an unexpected offer to purchase the company for $35 a share,[29] sparking a highly publicized takeover battle,[30] with Trump and Griffin filing lawsuits against each other.[31] The two ultimately reached a settlement, which was executed in November 1988, with Griffin purchasing the company for $365 million, and Trump purchasing the Taj Mahal from the company for $273 million.[32][33]

Merv Griffin era (1988–1996) edit

Griffin's purchase was financed with high-interest junk bonds sold by Michael Milken.[33] Less than a year after Griffin's takeover, Resorts began defaulting on interest payments to bondholders, due to the company's high debt load and inability to sell undeveloped real estate assets.[34] In 1989, Resorts entered Chapter 11 bankruptcy protection.[35] Under a prepackaged bankruptcy plan, bondholders received 78 percent of the company's stock, in exchange for canceling $496 million in debt.[35][36] As part of the deal, Griffin also invested $25 million in cash, the company again became publicly traded, and the Paradise Island property was put up for sale.[36][37]

Proceeds from the Paradise Island sale, expected to top $250 million, would have allowed Resorts to reduce its debt load to a level that could be serviced by cash flow from the Atlantic City property.[38] However, no serious offer over $150 million was received, leading the company to file Chapter 11 again in 1994.[38] The prepackaged bankruptcy plan reduced the company's debt by $289 million, and in exchange gave bondholders 40 percent of the reorganized company, plus proceeds from the sale of Paradise Island to South African Sol Kerzner's hotel firm Sun International.[39][40]

The company changed its name to Griffin Gaming & Entertainment in 1995.[41] Griffin hoped the new name would emphasize his connection to show business, as the company sought to expand into television and live entertainment.[41][42] Griffin Gaming announced plans in March 1996 to build a new casino hotel next to Resorts.[43]

In December 1996, Sun International purchased the company for $293 million in stock and assumed debt.[44] Sun hoped the acquisition would gain it quick access to the burgeoning Atlantic City casino market, and that Griffin's land holdings would provide a foundation for Sun's previously announced plan to build an $800-million casino on the Boardwalk.[45] The Griffin corporate entity became Sun International North America, and Sun's interests in the Mohegan Sun casino were folded into it.[46]

Colony Capital, which had purchased Resorts Atlantic City in 2001,[47] revived the Resorts International name in 2005, forming an affiliate company named Resorts International Holdings.[48][49] The Resorts brand would be attached to two of the company's other casinos, Resorts Tunica and Resorts East Chicago.[50][51]

Intertel edit

International Intelligence Inc., commonly known as Intertel, was a private security firm majority-owned by Resorts International.[52] Resorts financed the establishment of Intertel in 1970, as an outgrowth of Crosby's efforts to keep the company's Bahamas casino free of organized crime influence.[4][53][54] Intertel was responsible for security at Resorts properties, and offered its services to other hotels and large corporations.[54] Its other high-profile work included providing security for Howard Hughes,[55] investigating the Chicago Tylenol murders and the Bhopal disaster,[56][57] and arranging safe passage to the Bahamas for the Shah of Iran and deposed Nicaraguan dictator Anastasio Somoza.[58]

References edit

  1. ^ a b c Donald Janson (August 15, 1976). "Bahamas gambling interest is pressing Las Vegas-type casinos in Atlantic City". The New York Times. Retrieved 2017-01-01.
  2. ^ a b Joan Cook (April 12, 1986). "James M. Crosby, 58, founder of hotel and casino concern". The New York Times. Retrieved 2017-01-01.
  3. ^ a b Alan A. Block (1998). Masters of Paradise: Organized Crime and the Internal Revenue Service in the Bahamas. Transaction Publishers. pp. 67–68. ISBN 9781412828192.
  4. ^ a b c d e f g h Dory Owens (February 16, 1986). "Resorts gambles on future". Miami Herald – via NewsBank.
  5. ^ Daniel Heneghan (April 28, 1995). "Resorts to change name, reduce stock shares". The Press of Atlantic City – via NewsBank.
  6. ^ "Mary Carter acquires restaurant chain" (PDF). Matawan Journal. October 18, 1962. p. 11. Retrieved 2017-01-08.[permanent dead link]
  7. ^ a b c Steve Swartz (November 14, 1985). "Resorts International often baffles its rivals in gambling business". Wall Street Journal. ProQuest 397919724.  – via ProQuest (subscription required)
  8. ^ Chris Collins (July 17, 1977). "Shrimp farming plan advances". Washington Post. Retrieved 2017-01-08.
  9. ^ Sylvia Rubin (September 30, 1985). "The animals are moving two by two". San Francisco Chronicle – via NewsBank.
  10. ^ "Resorts drops plan to buy slot machine firm". Orlando Sentinel. December 22, 1978.  – via Newspapers.com (subscription required)
  11. ^ a b Jonathan P. Hicks (August 19, 1985). "What Resorts sees in Pan Am". New York Times. Retrieved 2017-01-08.
  12. ^ "Airlines Acquisition". CQ Almanac 1969. CQ Press. Retrieved 2017-01-08.
  13. ^ "Chalk's Airlines on block". Chicago Tribune. November 26, 1989. Retrieved 2017-01-08.
  14. ^ "From flying lessons to the wild blue yonder". Tampa Tribune. August 22, 1993 – via NewsBank.
  15. ^ In the matter of the application of Resorts International Hotel, Inc. for a casino license (PDF) (Report). New Jersey Office of Administrative Law. p. 262. Retrieved 2017-01-15.
  16. ^ a b William Norman Thompson (2001). Gambling in America: An Encyclopedia of History, Issues, and Society. ABC-CLIO. p. 16. ISBN 9781576071595.
  17. ^ Anne McGrath (October 27, 1983). "Ground broken for Resorts' 2d N.J. casino-hotel". Philadelphia Inquirer. AP – via NewsBank.
  18. ^ Richard Koenig (April 19, 1988). "Trump, man of glitz, is forced to cut back at Taj Mahal casino". Wall Street Journal. ProQuest 398124046.  – via ProQuest (subscription required)
  19. ^ Robert E. Dallos (June 8, 1985). "Casino-hotel operator Resorts International makes offer for TWA". Los Angeles Times. Retrieved 2017-01-08.
  20. ^ "Trans World Airlines Inc. has agreed in principle to..." UPI. June 13, 1985. Retrieved 2017-01-08.
  21. ^ Fen Montaigne (January 22, 1986). "Resorts helps write W. Va. bill". Philadelphia Inquirer – via NewsBank.
  22. ^ David Lyons (April 12, 1986). "Resorts won't buy Sunny Isles Sheraton". Miami Herald – via NewsBank.
  23. ^ John Laplante (May 22, 1986). "3-casino plan OK'd by panel". The Advocate. Baton Rouge, LA – via NewsBank.
  24. ^ "Resorts International receives takeover offer to rival Trump's". Sun-Sentinel. Fort Lauderdale, Florida. March 25, 1987. ProQuest 389592810.  – via ProQuest (subscription required)
  25. ^ John Crudele (March 10, 1987). "Trump buys 73% stake in Resorts for $79 million". New York Times. Retrieved 2016-03-13.
  26. ^ a b Joyce A. Venezia (July 22, 1987). "Trump completes the deal for Resorts International". Philadelphia Inquirer. AP – via NewsBank.
  27. ^ "Trump offers to buy rest of Resorts' common stock". Los Angeles Times. Reuters. December 22, 1987. Retrieved 2016-03-13.
  28. ^ Frank Allen (February 2, 1988). "Trump renews his push to take Resorts private". Wall Street Journal. ProQuest 398147631.  – via ProQuest (subscription required)
  29. ^ Al Delugach (March 18, 1988). "Griffin takes on Trump for Resorts shares". Los Angeles Times. Retrieved 2016-03-13.
  30. ^ "Takeover battle ends for Trump, Griffin". Chicago Tribune. AP. April 15, 1988. Retrieved 2016-03-13.
  31. ^ Eileen White Read; Richard Koenig (March 22, 1988). "Merv Griffin sues to block Trump offer for Resorts, says he may boost his own". Wall Street Journal. ProQuest 398029238.  – via ProQuest (subscription required)
  32. ^ Beatrice E. Garcia (November 16, 1988). "Trump completes the sale of Resorts to Merv Griffin". Wall Street Journal. ProQuest 398072552.  – via ProQuest (subscription required)
  33. ^ a b Tom Furlong (September 18, 1989). "Merv rolls the dice". Los Angeles Times. Retrieved 2017-01-02.
  34. ^ Mitchell Pacelle (August 29, 1989). "Is Resorts going bankrupt? $1B in debt, Griffin defaults". The Record. Hackensack, NJ – via NewsBank.
  35. ^ a b Iris Taylor (December 23, 1989). "Resorts parent file for bankruptcy with eye on swift approval of plan". The Star-Ledger. Newark, NJ – via NewsBank.
  36. ^ a b Daniel Heneghan (September 18, 1990). "Resorts emerges from Chapter 11". The Press of Atlantic City – via NewsBank.
  37. ^ Peter Cooney (August 18, 1990). "Resorts gets approval to go public in reorganization plan". The Philadelphia Inquirer. Reuters – via NewsBank.
  38. ^ a b Daniel Heneghan (March 22, 1994). "Resorts parent files prepackaged bankruptcy". The Press of Atlantic City – via NewsBank.
  39. ^ Daniel Heneghan (April 28, 1994). "Regulators approve plan for Resorts restructuring". The Press of Atlantic City – via NewsBank.
  40. ^ "Resorts reorganizes". The Star-Ledger. Newark, NJ. May 4, 1994 – via NewsBank.
  41. ^ a b Debra Dowling (June 28, 1995). "Resorts changes name to Griffin and votes one for five stock split". The Star-Ledger. Newark, NJ – via NewsBank.
  42. ^ Daniel Heneghan (May 7, 1995). "New Resorts president ready for expansion". The Press of Atlantic City – via NewsBank.
  43. ^ William Ehart (March 29, 1996). "Griffin sets plan to double Resorts". The Press of Atlantic City – via NewsBank.
  44. ^ Joe Weinert (December 17, 1996). "Sun (Int'l) takes over Resorts with a splash". The Press of Atlantic City – via NewsBank.
  45. ^ Joe Weinert (August 20, 1996). "Sun Hotels purchases Resorts in a deal valued at $301 million". The Press of Atlantic City – via NewsBank.
  46. ^ Form 10-K405: Annual Report (Report). Sun International North America. March 31, 1998. Part I, Item 1: Business.
  47. ^ Joe Weinert (April 26, 2001). "Colony Capital owns Resorts". The Press of Atlantic City – via NewsBank.
  48. ^ "Company creates casino division, names COO". Las Vegas Sun. July 11, 2005. Retrieved 2017-01-15.
  49. ^ Donald Wittkowski (February 14, 2006). "Wall Street predicts problems at Hilton parent". The Press of Atlantic City – via NewsBank.
  50. ^ Oliver Staley (June 15, 2005). "Grand likely to be renamed Harrah's". The Commercial Appeal. Memphis, TN – via NewsBank.
  51. ^ Michelle L. Quinn (April 27, 2005). "Few changes as Resorts takes over at E.C. casino". Post-Tribune. Merrillville, IN – via NewsBank.
  52. ^ "The big players on the Boardwalk". New York Times. February 5, 1978. Retrieved 2017-01-02.
  53. ^ In the matter of the application of Resorts International Hotel, Inc. for a casino license (PDF) (Report). New Jersey Office of Administrative Law. p. 261. Retrieved 2017-01-02.
  54. ^ a b Horace Sutton (October 3, 1971). "Private eyes aiding tourism". Chicago Tribune. Retrieved 2017-01-02.
  55. ^ Tom Zito (February 20, 1977). "Peloquin of Intertel: Intelligence, security, 'targets of opportunity'". Washington Post. Retrieved 2017-01-02.
  56. ^ Sharon Rutenberg (October 6, 1982). "Police in Philadelphia Wednesday called the death of a..." UPI. Retrieved 2017-01-16.
  57. ^ Kevin Maney (June 27, 1989). "Intertel's eye is international". USA Today – via NewsBank.
  58. ^ George Anastasia (June 16, 1985). "The man who 'is Resorts'". Philadelphia Inquirer – via NewsBank.

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