Resorts Weighs Asset Sale, Refinancing

ATLANTIC CITY, N.J. — Resorts International reported Monday that it is in preliminary negotiations for a possible refinancing or the sale of a major asset, prompting speculation by analysts that the company is considering selling its casino hotel here.

Company spokesman Phillip Wechsler said there would be no further statement. H. Steven Norton, the company’s executive vice president, and Marvin Ashner, casino hotel president, did not return telephone messages left at their offices.

Trading in Resorts’ stock was halted temporarily pending the announcement. After trading resume, Resorts’ class A common stock closed at $39.875 a share, up $2.50 from Friday’s closing price.

Analysts said the sale of the casino hotel, which is now debt-free, could give Resorts millions of dollars in cash with which it could repurchase stock or invest further in Pan Am Corp., in which Resorts now holds a 12.8% stake.

Resorts, which also owns a casino resort in the Bahamas and is building a second casino hotel here, is the largest private landowner in Atlantic City with about 16 square miles of property worth about $700 million.

It is building its new casino hotel on a 56-acre urban renewal tract bought from the city and is leasing 10.5 acres of the property to Atlantic City Showboat Inc., which is building a casino hotel there.

Analysts said Resorts could raise $200 million to $250 million by refinancing its operating casino, which was the first to open in this city after the state legalized casino gambling in Atlantic City. Sale of the property, which is among the most profitable of the 11 gaming halls here, could bring $300 million to $400 million, analysts said.

Marvin Roffman, with the investment firm Janney, Montgomery, Scott in Philadelphia, said the bigger casino hotel that Resorts is now building one block away from its Boardwalk property is more appropriate for the type of large-scale convention business that industry officials hope to attract in the future.

“It doesn’t make sense to me to own two properties in Atlantic City a block apart and tie up a huge amount of assets,” Roffman said.

Gaming officials have said future growth of the Atlantic City market hinges on the industry’s turning the resort into a major convention center. The market now is largely limited to gamblers within a 150-mile radius who come on day trips.

Saul Leonard of the Laventhol & Horwath accounting firm also said Resorts might want to sell its casino hotel because it is reluctant to compete with its new property or might be interested in further investment in Pan Am.

“I’ve heard so many different rumors that I don’t know the answer,” Leonard said.

Daniel Lee, an analyst with the New York investment firm of Drexel Burnham Lambert, said that “all of Resorts’ eggs are in one basket”--gambling. “Maybe it makes sense to diversify a little bit.”