Regulators approve Ilitch organization's $175 million ownership stake in Atlantic City casino
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New Jersey casino regulators gave the Ilitch organization the green light for a planned $175 million investment and 50 percent ownership stake in the Ocean Casino Resort in Atlantic City.
The state's Casino Control Commission granted interim casino authorization Thursday to the Ilitch-owned OCR Investment during a meeting livestreamed online.
The three-member commission favored the move unanimously after meeting for two days and hearing from Ilitch company executives as part of the approval process. The process also offered a glimpse into how the organization runs its casino business and its plans to potentially grow its gaming portfolio further.
The Ilitches' plans to purchase a stake in the casino were confirmed in April by casino owner and New York City-based hedge fund Luxor Capital Group LP. It marks the family's first non-pizza enterprise outside the Detroit area, though family matriarch Marian Ilitch, who owns MotorCity Casino Hotel, has long had ambitions to expand the gaming portfolio.
The Ilitch organization did not immediately respond to a request for comment from Crain's following the approval.
Bruce Dall, president of MotorCity and OCR Investment, said during Wednesday's board meeting that the Ilitch family first explored purchasing the Ocean Casino in 2014 but it was a "nonstarter." More recently, the family had considered the acquisition of several different gaming properties throughout the U.S. before revisiting Ocean Casino in July 2019.
Asked by the commission if the family was considering acquisitions in other markets, Dall said it is a possibility.
"To be honest with you, the casino sale market has cooled. ... Certainly, if there were to be something very interesting, we would take a look at it," Dall said. "I don't anticipate anything over the next year."
Luxor will retain the other half of ownership stock in Ocean Casino, according to the interim casino authorization petition filed by OCR Investment, which was obtained by Crain's.
The petition did not specify who will have controlling interest, but the Ilitch organization is also petitioning for approval of a management agreement in which it becomes manager of the casino.
Approval of the ownership shakeup comes just a couple days after the resignation of Terry Glebocki, the casino's CEO of two years who was credited with turning around its sharp financial decline.
"Glebocki has three decades of financial management experience, which navigated Ocean's course to financial stability," the casino said in a statement emailed to Crain's. "Terry joined Ocean on the brink of bankruptcy and is leaving the property as a leading casino resort in Atlantic City."
Asked about Glebocki's departure, Dall responded, "Everything's fluid in our industry. Things move fast. ... We anticipate replacing that position."
The Ilitches plan two phases of investment in the casino that would total $175 million and culminate in owning half the business. The first phase is $110 million for 32.4 percent. The second phase, subject to the Ilitch organization meeting certain financial criteria, is $65 million for 17.6 percent.
"OCR investment, indirectly through Marion (sic) Ilitch who is filing for qualification, will be self-funding the investment," the petition said.
Dall said that $70 million of the Ilitch investment would be used to add 464 hotel rooms and suites at Ocean Casino, which currently has 1,399 rooms. The rest of the investment would be used to pay down debt.
"We're in a much better shape than we even anticipated coming into this investment," Dall said, citing Ocean Casino's expected EBITDA of $60 million this year compared with $20 million last year and a loss the year before that.
In the petition, Marian Ilitch is listed as "investor." Her son Christopher Ilitch, president and CEO of Ilitch Holdings Inc., was also required to submit personal history disclosure forms, though his role in the transaction is not specified. Dall said he reports directly to Christopher Ilitch on MotorCity Casino matters.
