Tropicana Entertainment will convert some debt to stock and cancel other debt as part of a reorganization plan announced Tuesday.
Tuesday, Jan. 13, 2009 | 2:38 p.m.
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Tropicana Entertainment has filed a reorganization plan with the federal bankruptcy court in Delaware that would cancel the company’s long-term indebtedness and convert a portion of its debt into ownership stakes held by its creditors.
The ownership stakes would be in two separate entities, the company said.
One part of the plan is referred to as OpCo, which consists of 10 casinos and resorts, including properties in Atlantic City, N.J., and Indiana. The other is referred to as LandCo, which includes the Tropicana property in Las Vegas.
Under the plan, the secured debt of the $2.3 billion OpCo would be converted to stock and the unsecured debt would be canceled. All of the $442 million LandCo secured debt would be converted to equity.
The reorganization plans “describe nine months of effort to build our management team, infrastructure and capital base so that we can succeed in today’s challenging economic environment,” Scott Butera, Tropicana’s president and chief executive officer, said in a company news release. “They also reflect active and ongoing negotiations with our creditors and constituents.”
If approved, former owner William Yung – who creditors largely blamed for the company’s decline – would no longer own part of the Tropicana.
Tropicana Entertainment filed for Chapter 11 bankruptcy in May 2008 after it defaulted on nearly $2.7 billion in bonds.
The company lost its biggest asset when the New Jersey Casino Control Commission voted Dec. 12, 2007, not to renew the Tropicana’s casino license. The company said without the New Jersey property, it couldn’t afford to pay its debt.
The company began negotiations with the Cordish Company in September 2008 to purchase the Tropicana Atlantic City for $700 million, but no deal has been worked out.
The Nevada Gaming Commission board approved a four-man team appointed to guide Tropicana Entertainment through bankruptcy in August 2008, including the appointment of Butera.
In other company news, Tropicana Entertainment last week named Richard Baldwin its new vice president, chief financial officer and treasurer. Baldwin will replace Robert Kocienski, who resigned last week. The company also named veteran gaming executive Ron Thacker as president of Tropicana Las Vegas.
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