Icahn to pump $70 million-plus into Stratosphere

CARSON CITY -- Financier Carl Icahn, who gained preliminary state approval Wednesday to become the majority shareholder in the trouble-plagued Stratosphere hotel-casino in Las Vegas, says $70 million to $100 million will be spent to complete and upgrade the resort.

The hotel rooms and the tower will be completed, a swimming pool will be built and a sports book installed, Icahn told reporters.

His remarks came after the state Gaming Control Board recommended approval of his bid to hold 50.04 percent of the business, which has been in bankruptcy.

The board also recommended that Bradford T. Whitmore of Evanston, Ill., who holds 34.6 percent of the Stratosphere, be licensed. A spokesman for Icahn said 15 percent of the stock is owned by other individuals and Icahn may buy some of those shares.

Icahn was also licensed for Arizona Charlie's hotel-casino, now in bankruptcy, but he won't be able to have any decision-making power until fully approved by the state. The state is expected to make that ruling in about two months.

Despite concerns by analysts about the advent of 20,000 more hotel rooms in Las Vegas at a time when growth in the number of airline passengers arriving at McCarran International Airport is flat, Icahn was optimistic.

Talking about the Stratosphere, Icahn said, "It's a great property. It's in a good position with the tower. It's a good attraction.

"I emphasize we're in at the right price. Some of the casinos on the Strip have just too much debt on them.

"As you know, I buy things when nobody wants them and in the case of the Stratosphere, nobody wanted it so we were there. Arizona Charlie's was similar. I just go in when they are sort of unpopular. Like, I'm into tobacco now."

He doesn't anticipate any layoffs at either of the casinos.

"If anything, we will probably have to bring on some more employees," Icahn said. "At Arizona Charlie's, we're going to do some expansion. We will try to make it into a top-rated casino."

In both cases, Icahn invested in the casinos' notes and converted those to equity interest when the clubs were in bankruptcy court.

Initially, Icahn said his $2.7 million home in Summerlin would be used only part time but later said he may move to Las Vegas more on a full-time basis.

The board questioned Icahn about disciplinary problems he encountered in the past in the financial world. Board Chairman Bill Bible termed them minor but wanted to impress on Icahn he will have to toe the line on state regulations in Nevada.

In Virginia, he ran into trouble because of an unlicensed stock agent working for him. In 1978 he paid a $10,000 fine because of an inaccurate statement submitted to the New York Stock exchange.

Icahn said his violations were small.

"I'm proud of my record on Wall Street. I feel I've been careful to follow every regulation." Aside from the question of morality, Icahn said it was "expensive and time consuming" to get into trouble.

He was questioned about bets on professional football games on Sundays with Sheldon Kravitz, described as a New York advertising executive. Icahn said the bets were small but it was later revealed they are in the $10,000 range.

The board wanted to know whether Kravitz booked the bets himself or if he laid them off to a licensed bookmaker. Icahn said he thought Kravitz placed the bets with a bookmaker, and didn't keep a percentage for himself.

He said Kravitz never used runners in Nevada to place the wagers. His attorney, Frank Schreck, told the board Icahn knows that he will be restricted in the future from making these wagers in New York.

The board expressed concern about Whitmore's past business dealings with regulatory authorities. He had also purchased bonds in the Stratosphere and converted them to stock during the bankruptcy.

Whitmore, a partner in a company called Grace Brothers, has interests in hotels and some gambling operations in the Caribbean. There have been problems with tax liens and other regulations.

Board member Steve DuCharme told Whitmore "You need to spend more time on regulations." Whitmore replied he is aware of the Nevada regulations. He will have two representatives on the board of directors at the Stratosphere.

Icahn, through another attorney Jeff Silver, sought emergency approval to run Arizona Charlie's. But the board balked at this.

Bible told Silver that Icahn should have submitted a regular application to acquire the casino, rather than asking for emergency approval to participate in the operation. He said Icahn wants to be able to operate as an owner in Arizona Charlie's without being licensed.

Silver argued, "We want to be involved in the decisions. Not the day-to-day ones. But we want to be involved in the major decisions."

Bruce Becker, a member of the Becker family that formerly owned the casino, will continue for the next 60 days as general manager. The board said Icahn or his representatives could consult with Becker but the final decisions are up to Becker.

Bible told Silver that if he wanted to change that arrangement, he should return to the bankruptcy court. Icahn said later that he had talked with Becker Wednesday and it appears they can work together.

Gerald Heetland, attorney for Arizona Charlie's, told the board the casino has experienced some of its best months since it was put into Chapter 11 bankruptcy. The trade creditors have been paid and Heetland said he didn't think Icahn would have to put in any extra cash.

Arizona Charlie's fell into bankruptcy, not because of the Las Vegas business but because of a riverboat construction project in Missouri. The boat was constructed but because of Becker's failure to get licensed there and the unsettled gaming conditions there, it could not be sold. "People have backed away ... the boat is sitting there. That generated the crisis," Heetland said.

Heetland said that until Icahn is fully licensed, Becker is responsible for the operation of the casino. But Becker will "welcome his (Icahn's) oversight," he said.

Icahn hired Bill Friedman, Dan Cassela and Tom Lattero to oversee Arizona Charlie's. All three presently have gaming licenses.

The state Gaming Commission meets Aug. 20 in Carson City to give final approval to the applications.

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