Lenders give Tropicana 1-year break on debt

December 21, 2007 6:48:49 PM PST
Lenders have given the former owners of the Tropicana Casino and Resort a year of breathing room before they can demand repayment of debt, the company said Friday. Tropicana Entertainment LLC said its senior lenders agreed to hold off for up to a year before declaring the company to be in default of its loan terms - a move that Tropicana said could have pushed it into bankruptcy.

The deal was reached late Thursday night.

New Jersey casino regulators stripped the Tropicana of its license on Dec. 12, determining that its owners, Columbia Sussex Corp., were incapable of operating the type of "first-class facility" required under state law.

The loss of the license could have enabled lenders to almost immediately demand repayment of loans.

Tropicana plans to sell its casinos in Atlantic City, Evansville, Ind. and Vicksburg, Miss. to raise money to pay off its debt.

A state-appointed trustee in New Jersey is seeking a buyer for the Tropicana in Atlantic City from among more than a half-dozen suitors.

"We are pleased to have reached an accommodation with our senior lenders and the trustee overseeing the Tropicana Atlantic City so that we can proceed with the orderly sale of our properties in Atlantic City, Evansville and Vicksburg, retire our senior credit facility and position our company for long-term growth," said William J. Yung, Tropicana Entertainment's president and chief executive officer.

The deal preserves the company's ability to borrow under a $90 million revolving loan commitment, which was reduced from an original amount of $180 million. It also grants lenders faster accumulation of interest payments.

Columbia Sussex bought the Tropicana from Aztar Corp. on Jan. 3, and ran it for less than a year before its severe cost-cutting measures led to problems with cleanliness, staffing and service. Those concerns were cited by the state Casino Control Commission in denying the company a new license.