ATLANTIC CITY-This gaming mecca is about to get yet another sprawling casino/hotel/resort property, but will lose a small, older hotel property in the process. The Las Vegas-based Pinnacle Entertainment Inc. has signed a definitive agreement to buy 18 contiguous acres along this city’s boardwalk for $250 million. The primary properties are the existing Sands Casino Hotel and the former Traymore Hotel site.

The sellers of the properties are affiliates of financier Carl Icahn, the primary affiliate being Atlantic Coast Entertainment Holdings Inc. (ACE Hi). The major stockholder of ACE Hi, AREP Sands Holding LLC, owns approximately 58% of the outstanding stock of ACE Hi. AREP Sands itself is a wholly owned subsidiary of Icahn’s American Real Estate Holdings LP.

And Pinnacle, which develops upscale mixed-use properties with or without casinos, plans to redevelop the site with an entirely new casino/hotel property. That plan calls for the 26-year-old Sands, one of the city’s smaller hotel/casino properties with 600 guest rooms, to be shuttered and torn down. While the deal isn’t expected to close until year’s end, the agreement calls for the Sands to be closed for good within 70 days, or approximately mid-November.

“While we regret the necessity of closing the Sands, we look forward to working with gaming regulators, state and local authorities to create more jobs, tax revenues and other benefits,” says Daniel R. Lee, Pinnacle’s chairman/CEO. “In connection with our longstanding interest in Atlantic City, we submitted our initial license application in New Jersey several months ago. The regulatory investigation is ongoing.”

“After spending many months reviewing various projects for this property, it became patently clear that a shutdown of the Sands was necessary and inevitable to make room for a great new casino,” Icahn says, in a prepared statement. “We also concluded that this was the most propitious time to undertake this shutdown given the robust employment environment in Atlantic City.”

According to details released by the buyer and seller, the deal is not subject to financing. The agreement also contains non-solicitation, fiduciary and termination fee provisions. ACE Hi can’t solicit other acquisition proposals, but for 45 days has the right to negotiate with anyone submitting an unsolicited proposal. If ACE Hi reneges on the sale agreement in favor of another bidder, the termination fee is $10 million.

And while Pinnacle develops properties with or without casinos, casinos are apparently part of the long-term game plan for the company. “This major new resort will be a key component in our plan to build a national network of gaming properties,” Lee says. Interestingly, one of those properties is a gaming/entertainment project proposed for 33 acres on the Delaware River waterfront just an hour’s drive to the west in Philadelphia.

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