Update: Court Order Sought on Atlantic Club Deal by The Rational Group
Namely, in the latest development in the Rational’s attempt to buy the New Jersey casino which hit the media headlines, the Isle of Man-based giant accused Colony of bad faith, revealing some of the figures on the agreed sale price, which are surprisingly lower than anticipated.
Reportedly, in its complaint filed with a New Jersey court, Rational claimed that the agreed price for Atlantic Club was $15 million, $11 million of which has already been paid, and that Colony used the expiration date on the agreement to back out of the deal and claim the other $4 million as a termination fee.
In addition, Rational specified that it has spent over $224,000 to start work on a poker club inside the casino, and on upgrades elsewhere within it.
If this is allowed, Rational would end up with $15 million less in its pockets and nothing for it in return, the group states in the court action, also adding that Colony demanded an additional $6 million to extend the sale contract for another 10 days during which they would still be free to seek a better offer from someone else.
Colony also refused a compromise proposed by Rational, that it should pay the remaining $4 million of the agreed sales price in return for extending the sale contract until approval could be obtained from New Jersey casino regulators.
So far no comment has arrived from The Atlantic Club and Colony Capital officials, while on behalf of Rational Group its communications exec Eric Hollreiser said that his company has funded Atlantic Club shortfalls throughout the winter season since October 2012, thus preventing its bankruptcy and the loss of over 1,800 jobs.
Namely, in its court papers Rational also claims that they were the ones approached by Colony about a sale, and that the company underlined the beleaguered casino's "difficult financial situation" and "huge liabilities including more than $30 million in unfunded pension liabilities."
Apparently, the casino was the one that repeatedly stressed that if a deal could not be reached quickly they would be forced to declare bankruptcy and put 1,800 jobs into jeopardy, which is one of the reasons why Rational agreed to finance the casino's losses while the application process was under way, confirming that up to $750,000 per week will be counted against the eventual purchase price.
However, the Rational - Colony agreement to finalize the purchase of Atlantic Club by April 26 did not envisage that it would take a long time to collect and submit the documents and exhibits necessary to win approval from the Casino Control Commission, an oversight that could cost Rational a great deal of money.
Regarding the situation, Hollreiser also specified that "The Rational Group remains entirely committed to resolving this situation, and to its investment in New Jersey, while it continues to diligently work on completing the required licensing process."
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