Tropicana could emerge from Chapter 11 in May

By Amanda Finnegan (contact)

Friday, March 6, 2009 | 11:07 a.m.

Tropicana Entertainment announced today it is one step closer to exiting Chapter 11 after a Delaware bankruptcy court approved the company’s reorganization plan.

The plan will cancel the company’s long-term indebtedness and convert a portion of its debt into ownership stakes held by its creditors.

The company will solicit creditors’ votes to approve the plans next month. A favorable vote could allow Tropicana to emerge from Chapter 11 as early as May.

Tropicana’s plan, which it announced details of in January, breaks up its properties into two entities. 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.

Under the approved plan, former owner William Yung – who creditors largely blamed for the company’s decline – will no longer own any part of Tropicana, nor will he hold any position in the newly constructed company.

“The ruling marks the culmination of an intense 10-month process during which the new Board and senior management team have worked hard to repair our regulatory and community relationships and to prepare our people and systems to compete in today's challenging entertainment and gaming market,” Tropicana chief executive officer Scott Butera said in a statement today.

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 in December 2007 not to renew the Tropicana’s casino license. Tropicana Entertainment said without the New Jersey property, it couldn’t afford to pay its debt.

Last month, the company hired branding firm Hornall Anderson Design Works to reposition itself as a value-oriented company. The firm is known for rebranding efforts with retail brands like Jamba Juice, Nordstrom, T-Mobile, Tommy Bahama, the Seattle Supersonics and the Space Needle.