Carl Icahn’s Letter To Local 54 Employees of the Trump Taj Mahal by Carl Icahn, Sharholders’ Square Table
CARL C. ICAHN
767 Fifth Avenue, Suite 4700
New York, New York 10153
At this year's inaugural London Quality Growth Investor conference, Denis Callioni, analyst and portfolio manager at European investment group Comgest, highlighted one of the top ideas of the Comgest Europe Growth Fund. According to the speaker, the team managing this fund focus on finding companies that have stainable growth trajectories with a proven track record Read More
June 9, 2015
To Local 54 Employees of the Trump Taj Mahal:
There are some important facts about your union that it is critical that you understand. UNITEHERE is a driving force behind a dysfunctional system that enriches those in power to the detriment of its own members. In Atlantic City, they have contributed to the precipitous downfall and closure of one-third of the casinos, which has resulted in a devastating loss of employment for so many of your brethren in that city. Nationally, they use the money contributed to pension funds on your behalf to buy stock in public companies, and then use that stock to intimidate these companies into joining pension and healthcare plans that will further increase their own income and fees. This has resulted in tremendous underperformance at your expense. For example, the NRF pension fund that UNITEHERE promotes has been managed so poorly that it will likely have to be abandoned. At the end of 2013 (the most recent date for which information is publicly available), the NRF pension fund was less than 60% funded. It had a shortfall of over $3.7 billion according to the Form 5500 filed with the Department of Labor, and as a result the federal government has classified it as being in critical status. Nevertheless, your union continues to try to force employers to make contributions into the NRF pension fund, even though they know that 86,000 current workers will not accrue any additional benefits from those contributions. In other words, your Union is needlessly putting your pension at risk! It’s akin to a ponzi scheme – one that UNITEHERE has fully supported for years.
Unfortunately it seems that you continue to believe the many lies your union leadership keeps telling you, even though it is obvious that the union leadership uses your capital to enrich themselves. But we intend to put a stop to this. We believe it is incumbent upon us to rouse shareholders to action. Shareholders of companies in hospitality, gaming and other industries need to understand that their management teams and boards of directors are allowing corporate assets to be pillaged by UNITEHERE when they acquiesce to demands that they contribute to the critically underfunded NRF pension plan. I personally have no idea how a board of directors could justify submitting to these uneconomic demands, and I believe shareholders should be asking whether it is consistent with the fiduciary duties of their directors to waste corporate assets in support of a critically underfunded pension plan that may never pay a dime to current employees. Tropicana recognized all of this, and instead of contributing to the black hole that is the NRF pension fund, it has been accruing contributions that will be safe and secure for the future of its employees. Because I believe UNITEHERE has a stranglehold over companies that lack the fortitude to fight back, we have launched our own investigation into the matter, and we plan to take the fight to any company where we find malfeasance and sweetheart Union deals.
Your union leadership has used lies to obfuscate the truth. They have enriched themselves at the expense of our companies and their employees. But this will no longer be a one-way street whereby union leadership intimidates and threatens corporate management and boards of directors. I am working assiduously to uncover the truth concerning UNITEHERE’s leadership, who I believe are entrenched, self-dealing and dishonest.
Carl C. Icahn
Additionally, both the flyer and the letter your leadership distributed in front of my building today, to say it bluntly, are full of blatant lies. In a number of ways they blame me for the problems at the Taj. However, your union leadership is in full knowledge of the fact that, as I have said countless times already, I am not currently, nor have I ever been, on the board of the Taj Mahal or involved in managing the Taj Mahal. It was the company itself, and not me, that asked the bankruptcy judge to allow them to stop making payments to your UNITEHERE Health plan and to make changes to your work rules, and they did this because the only other alternative would have been to close the Taj Mahal. Frankly, I think they made the right decision. I view it as a difficult decision that was made in order to SAVE YOUR JOBS. That is the fundamental truth that your union leadership continues to obfuscate – if the Taj Mahal was required to make contributions to the immensely profitable UNITEHERE Health plan then there would be no Taj Mahal, you would have no job and the blood of another Atlantic City casino would be on the hands of your union leadership.
It is an undisputable fact that your union leadership refused to negotiate with the Taj as its losses were mounting and it was pushed into bankruptcy. Your union leadership refused to consider any concession that would have helped keep the Taj afloat, and that is because your jobs do not matter to the union leadership. Instead, all they care about is keeping the money flowing into their lucrative health plan that has made more than $140 million of net income over the past five years. As a result, the company reached out to me to see if I would provide the money necessary to save the Taj, just as I had done for the Tropicana several years ago. And I did just that, loaning the Taj tens of millions of dollars in DIP financing and providing a commitment to lend $80 million if the company emerges from bankruptcy. That is on top of the more than $200 million I have already lost in this investment. I am not asking you to thank me for keeping the Taj open, but blaming me is patently ridiculous and completely disconnected from reality.