Tropicana parent to get Icahn loan

Billionaire investor Carl Icahn has agreed to loan Tropicana Entertainment $150 million as part of a bankruptcy plan approved Tuesday by the U.S. Bankruptcy Court in Delaware.

The loan deepens Icahn's investment in the Las Vegas-based gaming company. Icahn will be positioned as one of the company's two largest shareholders after Tropicana Entertainment's nearly $2.4 billion debt load is exchanged for equity in the restructured company. He is also positioned to acquire some seats on the board of directors.

Also, an Icahn-led group of investors has offered $200 million for the Tropicana Atlantic City as part of an auction that New Jersey gaming regulators approved last week.

The bankruptcy court's approval of the creditor-supported plan to bring Tropicana Entertainment out of bankruptcy comes a year after the gaming company filed for Chapter 11.

"We are now equipped not only to endure the economic circumstances facing the casino gaming industry today, but also to take advantage of opportunities as the industry rebounds in the years ahead," Tropicana Entertainment Chief Executive Officer Scott Butera said in a statement.

The creditors' plan, first filed with the court March 24, would have the Tropicana on the Strip broken off into a separate company partly owned and headed by former MGM Mirage executive Alex Yemenidjian.

Yemenidjian did not return an e-mail Tuesday seeking comment.

The second group of eight casinos, which are in Nevada, Indiana, Louisiana and Mississippi will be owned by a separate group of creditors who will exchange their debt for equity in the company. Icahn is involved with this group.

Unsecured creditors will receive cash or warrants to buy shares and will be entitled to an interest in a litigation trust.

The second group of casinos will be operated by the current Tropicana Entertainment management team, which Butera will lead.

Kentucky-based hotelier Bill Yung III, who owned the company before the bankruptcy, will lose his ownership stake and will not hold any position with the company after it emerges from bankruptcy.

The bankruptcy will allow the new companies to shed more than $2.4 billion in debt, saving more than $125 million in yearly interest payments.

The $150 million loan from Icahn will be used to pay back $65 million in debtor-in-possession financing from Greenwich, Conn.-based Silver Point Finance, plus additional debt and fees incurred during the bankruptcy.

The new loan, which has a 15 percent interest rate, increases Icahn's investment in the gaming company.

Tropicana Atlantic City has been under state control since New Jersey pulled Yung's gaming license in December 2007 because of regulatory violations. The economic downturn and the tight credit markets have hindered efforts to sell the property.

The restructuring needs approval by gaming regulators in Nevada, Indiana, Louisiana, Mississippi and New Jersey.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.