Tropicana bankruptcy deal reached; to emerge from Chapter 11
March 24, 2009
LAKE TAHOE ” Tropicana Entertainment LLC, the owner of Lake Tahoe Horizon Casino and MontBleu Resort at Stateline among other properties, says it reached a deal with creditors and hopes to emerge from Chapter 11 protection sometime in late April or early May.
Holders of secured debt would get stock in the reorganized company.
Tom Davis, Horizon Casino Resort spokesman, said he wasn’t privy to the discussions, but said the agreement sounds typical for how a company is reorganized after filing for Chapter 11.
Even with the tough market, Horizon and MontBleu Resort Casino & Spa will continue to operate and plan ahead for the summer season, Davis said.
The plans for reorganization, which are the result of a process that began when Tropicana filed for protection from its creditors a year ago, generally call for secured debt to be converted to common stock and for general unsecured debt to be discharged in exchange for warrants, interests in a litigation trust and cash for certain creditors.
The plans also cancel all the equity interests of former owner William J. Yung, III, who will not hold any positions with the company.
Recommended Stories For You
Creditors who are allowed to vote have until April 17 to submit their ballots. If creditors vote to accept the plans and the Bankruptcy Court finds that they meet all statutory requirements at confirmation hearings scheduled to begin April 27, Tropicana hopes to emerge from Chapter 11 soon thereafter.
In its letter to creditors, the committee wrote that its support is the result of “vigorous negotiations” among Tropicana, the secured lenders and the committee. The letter asserts that the committee obtained what “it believes is improved treatment for all classes of general unsecured claims compared with treatment proposed in previously-filed versions.”
“Understanding that the backdrop for this effort has been the nation’s continuing financial crisis, we commend our lenders and the committee for engaging in a highly productive negotiation,” said Tropicana CEO Scott C. Butera. “Our plan is stronger for these efforts because we have been able to take into account the interests of all the company’s key stakeholders.
“Our employees have earned our highest respect,” Butera said. “Throughout the restructuring process, they have been enthusiastic and extremely loyal. Now, with renewed regulatory and community relationships, stronger employee relations, and better overall business systems in place, we feel we have the resources necessary to operate in the highly competitive hospitality and gaming industry.”
In April 2008, a settlement agreement was reached in Douglas County District Court after Park Cattle Co., the owner of the property on which the Horizon Casino Resort sits, sued casino subsidiaries of Tropicana, Columbia Sussex. The settlement agreement was for $165 million.
Edgewood Cos., which includes Park Cattle Co., claimed the Tahoe property was not properly maintained.
The fallout from losing its New Jersey casino license in December 2007 forced Tropicana Casino and Resort casinos to seek and subsequently get Chapter 11 bankruptcy protection in May 2008. Horizon and MontBleu Resort Casino & Spa were among the Tropicana casinos in bankruptcy protection.
Meanwhile the future remains uncertain for Horizon, which under a settlement reached in April, the resort and casino’s lease will end on March 31, 2011.
If Tropicana Entertainment, the parent company for Horizon and MontBleu Resort Casino & Spa, can’t renew the lease by April 2, 2011, Park could terminate the lease and take over the Horizon and operate it using its equipment for two years, according to a settlement.
At the time Park expressed an interest for a hotel next door at Edgewood Tahoe Golf Course, possibly demolitioning the existing building to build a new structure, according to a permit application to the Tahoe Regional Planning Agency.
” News Business Wire contributed to this report