Tropicana Las Vegas sold to largest secured creditor, exits bankruptcy

By Caroline Salls

Pittsburgh, July 6 - A majority stake in the Tropicana Las Vegas Hotel and Casino has been sold to Onex Corp., together with Alex Yemenidjian, after the property emerged from bankruptcy on July 1, according to an Onex news release.

Under the terms of Tropicana's plan of reorganization, all secured debt holders, of which Onex was the largest, received 100% of the equity in the resort property.

Yemenidjian, former president of MGM Mirage and Onex's partner in the gaming sector, has been appointed chairman and chief executive officer of Tropicana Las Vegas, effective immediately.

According to the release, the Tropicana Las Vegas emerges from bankruptcy with no debt, more than $10 million of cash, and commitments from Onex and other equityholders to invest at least $75 million of capital to upgrade the property.

"With 25 years of active ownership experience, significant resources and business acumen, Onex is the ideal partner to transform the Tropicana Las Vegas," Yemenidjian said in the release.

As previously reported, Tropicana Entertainment LLC will form two operating enterprises. One of the enterprises will be comprised of the company's assets outside of Las Vegas and the other made up solely of the Tropicana Casino & Resort on the Las Vegas Strip.

The companies will be owned by separate groups of creditors who will exchange their debt for equity in the reorganized enterprises.

Unsecured creditors will receive warrants to purchase shares or cash and will be entitled to certain litigation proceeds.

Plan creditor treatment

Treatment of creditors under the court-approved plans will include:

• Holders of administrative claims, priority tax claims and other priority claims will be paid in full in cash;

• Holders of other secured claims will either be paid in full in cash or receive the collateral securing the claim;

• Holders of credit facility claims will receive their share of the reorganized operating company's common stock, subject to the terms of the rights offering, reorganized operating company notes and Tropicana Atlantic City sale proceeds;

• Holders of noteholder unsecured claims and general unsecured claims will receive a share of subscription rights, reorganized operating company warrants and litigation trust proceeds;

• Holders of credit facility deficiency claims will receive a share of litigation trust proceeds;

• Holders of insider claims will receive their share of an insider cash distribution;

• Holders of unsecured convenience class claims will recover 2% of their claims in cash, plus a share of $300,000;

• Holders of LandCo stock pledge claims, Yung interests, JMBS Casino Trust interests and intercompany interests will receive no distribution; and

• Holders of intercompany claims will receive no distribution, but the company reserves the right to reinstate these claims.

Onex said it expects to begin a comprehensive renovation of the property later this year. The renovation is expected to be finished in 2010.

Tropicana Entertainment, a Fort Mitchell, Ky.-based gaming entertainment provider, filed for bankruptcy on May 5, 2008 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 08-10856.

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