Cosmopolitan Chief Operating Officer Scott Butera, a former investment banker specializing in reorganizing financially troubled companies, has left the troubled Strip project to take over as president of Tropicana Entertainment, the parent company of the Tropicana Las Vegas.
Butera leaves the $3.9 billion project as Deutsche Bank has begun foreclosure proceedings on the mixed-use development that is being built adjacent to MGM Mirage’s massive CityCenter.
He is taking over a subsidiary of Crestview Hills, Ky.-based Columbia Sussex Corp., which recently lost control of its Tropicana property in Atlantic City, is under investigation by Nevada gaming regulators and suffered a setback in Delaware Chancery Court. That court issued a ruling that was considered a win for the company’s bond and high-yield debt holders.
“In a strange way that’s part of the appeal,” said Butera, who will remain in Las Vegas. “There is a lot of work to be done at Tropicana in all of its markets. And when I say we need a comprehensive turnaround, each area of the company needs a lot of work.”
Tropicana Entertainment owns 11 casinos in Nevada, Indiana, Louisiana and Mississippi, including the Tropicana Express and River Palms in Laughlin, the off-Strip Westin and two resorts in Lake Tahoe.
Part of the work has to begin with lenders. Last month, the Delaware court declared an “event of default,” giving Columbia Sussex principal Bill Yung III until the end of the month to negotiate new terms with bond and high-yield debt holders. If the Columbia Sussex owner can’t negotiate new terms, he could be forced to restructure the company.
Moody’s Investors Service downgraded Tropicana Entertainment’s bond rating following the court decision, warning that if the company is unable to fix the default, a bankruptcy filing is possible.
Butera spent 15 years as an investment banker focused on gaming, lodging and leisure industries. From 2000 to 2003, he was executive director at UBS Investment Bank.
He also spent time as president and chief operating officer of Trump Hotels & Casino Resorts helping recapitalize the troubled company.
Butera said there are many similarities in the challenges he faced at Trump and at his new job.
Confidence needs to be restored among the company’s customers and employees to be able “to deliver a product that is competitive in this environment,” he said Tuesday.
“This was an opportunity to run what I think is an important company at a very important time in its life,” Butera said. “For me it was a very good opportunity to take on what I think is a real large and important assignment.”
Butera, who joined the Cosmopolitan in January 2007 as chief financial officer, is the second top executive to leave struggling New York-based developer Bruce Eichner’s project this year.
He had been COO since early January when Audrey Oswell departed Cosmopolitan for the under-construction Fontainebleau.
“My future with the Cosmopolitan could have been extremely good,” Butera said of his decision. “But this was an opportunity I wanted to take on.”
Butera spent the past few months crossing the country working to secure partners and raise financing for the project. He told the Review-Journal Feb. 28 that a tentative deal had been worked out between Global Hyatt Corp., Marathon Asset Management and Eichner to recapitalize the project.
However, Deutsche Bank, which is the lead lender, began foreclosure proceedings last week.
“We are in a very difficult credit environment,” Butera said. “I’m optimistic in time there will be a resolution. I wasn’t really wanting to leave the Cosmopolitan, and I believe it will find the right financial backing.”
Contact reporter Arnold M. Knightly at firstname.lastname@example.org or (702) 477-3893.