Tropicana owner, creditors agree on plan to emerge from bankruptcy

Tropicana Entertainment reached agreements with its creditors on a plan that could have the struggling casino company emerge from Chapter 11 bankruptcy as early as May, a year after filing.

One component of the proposed restructuring would have the Tropicana on the Strip broken off into a separate company that would be partly owned and headed by former MGM Mirage executive Alex Yemenidjian, a filing Monday with the U.S. Bankruptcy Court in Delaware shows.

Representatives from Tropicana Entertainment verified the scenario but declined to comment further.

On Tuesday, the Las Vegas-based gaming company said it has begun distributing ballots to its debtholders, who have until April 17 to vote on the bankruptcy plan.

Company Chief Executive Officer Scott Butera said 50 percent of the creditors holding 75 percent of the company's outstanding debt will need to accept the proposal for it to be approved. The U.S. Bankruptcy Court in Delaware has scheduled a hearing for April 27 on the restructuring proposal.

The company has $1.4 billion in senior notes, $960 million in subordinate notes and other debt outstanding.

The restructuring plan calls for secured debt to be converted to common stock, with unsecured debtholders receiving warrants and interest in a litigation trust. Some creditors would also receive cash.

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

Butera said the plan will let the company emerge from bankruptcy with almost no debt, which will help it survive the recession and benefit once the economy begins to rebound.

"All these companies that have all this debt are going to be living check-to-check unless they can do something about it," Butera said. " ... We don't have that issue. Our properties are all positive cash flow."

The proposed new ownership structure also would need the approval of regulators in the four states where the company operates.

The gaming company owns four casinos in Nevada, the Tropicana on the Strip, two casinos in Laughlin and two in Northern Nevada.

The Strip property is already held separately in the restructuring due to a $440 million secured loan against the property.

A big question left unresolved in the restructuring proposal is the future ownership of the Tropicana Atlantic City, the company's largest revenue generator before its bankruptcy.

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

A group led by billionaire financier Carl Icahn and Silver Point Finance, a Greenwich, Conn.-based hedge fund, has expressed interest in buying the New Jersey property. The Icahn group has agreed to assume a stalking horse role in the bankruptcy, but has not said how much it will bid for the property.

New Jersey regulators last week extended until April 30 as the date for the sale to close.

Icahn is no stranger to gaming, having sold his gaming subsidiary -- which included the Stratosphere, both Arizona Charlie's hotel-casinos and the Aquarius in Laughlin -- to Whitehall Real Estate Funds for $1.3 billion in February 2008.

Yemenidjian served as president of MGM Mirage from 1995 through 1999, and was on the company's board from 1989 until 2005.

He also served as chairman and CEO of Metro-Goldwyn-Mayer from 1999 until 2006.

Yemenidjian, who now controls investment firm Armenco Holdings, told the Review-Journal in June 2005 that he would be interested in owning a casino.

"Gaming is something close to my heart," Yemenidjian said during an interview discussing his departure from MGM Mirage's board. "It's been six years since I was involved in the industry. I'm not looking for a job, I'm looking to be a principal."

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893. The Associated Press contributed to this report.