Tropicana's fight out of Chapter 11

November 10, 2008 11:22:14 AM PST
Whether or not it regains control of the Tropicana Casino and Resort in Atlantic City, Tropicana Entertainment LLC has a plan to emerge from bankruptcy court. It aims to aggressively cut costs, spend money to upgrade facilities, and retain top gamblers and employees.

The Las Vegas-based company sought bankruptcy protection in May, part of the fallout from losing its casino license in New Jersey due to massive layoffs that led to problems with cleanliness and service at the Tropicana in Atlantic City.

Its petition in U.S. Bankruptcy Court in Delaware listed assets of $2.8 billion and liabilities of $3.3 billion.

A new buyer is being sought for the casino. But the company's business plan is designed to go forward with or without it.

The plan would have to be approved by a bankruptcy court judge, as well as creditors.

Tropicana Entertainment LLC on Monday released a business plan designed to position the company as a high-quality but affordably priced option in all its markets, including Las Vegas and other Nevada locations; Baton Rouge, La.; and Greenville and Vicksburg, Miss.

It had been trying to sell its Casino Aztar in Evansville, Ind. in bankruptcy court, but prospects for a deal are uncertain right now, a spokesman said. A deal to sell the Horizon Casino Hotel, a riverboat casino it owns in Vicksburg, Miss., fell through earlier this year.

"We will be emerging into one of the most difficult markets for gaming and hospitality services ever experienced by the industry," said Scott Butera, the company's CEO.

"The key for us will be to stabilize our revenue base and grow profits through aggressive cost management; strategic investments in products, services and facilities; targeted customer development and retention programs; and a more motivated and service-driven staff," he said.

The company stressed that although it has included the Atlantic City Tropicana in its plans, that does not mean it has reached a decision to either keep or sell it - or any of its 10 other properties.

The Atlantic City Tropicana was not included in the Chapter 11 bankruptcy filing.

But its future is cloudier than ever right now. It is owned by a state-appointed trustee, who is seeking a new buyer for it.

Those efforts, however, are on hold until the New Jersey Supreme Court hears the company's appeal of the state's decision to revoke its casino license. Oral arguments will be heard next Monday.

Baltimore-based Cordish Company has been tapped as a potential purchaser of the Atlantic City Tropicana in a bankruptcy court auction.

And Tropicana Entertainment has petitioned the New Jersey Casino Control Commission to return control of the Atlantic City casino to it, arguing that it has become a new, better company than the one that was found unsuitable to operate a casino in December 2007. No hearing has been scheduled on that request.

The plan released Monday estimates that the 11 Tropicana properties - including two for which buyers are being sought - will produce net revenue this year of $995 million, and earnings before interest, taxes, depreciation and amortization of $129 million. That method is widely used in the casino industry to measure a casino's performance.

The plan also calls for spending $64 million in capital expenditures from internally generated cash.

Tropicana Entertainment plans to improve its slot machines, reconfigure some casino floors, consolidate some operations and enhance its restaurants.

The company operates 540,000 square feet of casino space nationwide with 15,000 slot machines, and produces over $1.2 billion in annual revenue.

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