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Tropicana Casino May File For Protection
The current economic crisis in the United States is hitting everyone hard, even the indomitable businesses on the Las Vegas Strip. It was announced today that Tropicana Entertainment LLC is planning on filing for bankruptcy protection, making it the largest corporate bankruptcy so far in 2008. A major blow to the city of Las Vegas which is already reeling from decreased gambling revenues and canceled building projects, the Kentucky-based Tropicana has been struggling for the last few years. In addition to the casino resort on the Vegas Strip, they also own a bunch of smaller establishments from Mississippi to Baton Rouge, Louisiana.
According to inside sources, the company missed an interest payment on a $1.32 billion loan held by Credit Suisse and they are not expected to make the payment in the near future. The missed payment terminates their forbearance agreement with the bondholders, leaving the company no choice but to file for bankruptcy protection.
Tropicana’s troubles started late in 2007 when New Jersey regulators stripped the company of all of their gambling licenses in the state where they operated a casino in Atlantic City. The revocation came after the owner of Tropicana Entertainment LLC made severe cutbacks at the property, leaving the casino one of the most poorly managed in Atlantic City. This caused them to be in violation of New Jersey gambling regulations.
The company was rated at $2.67 billion in bank and bond debt according to Moody’s Investor Service. Their bonds come due December 2014 and were trading at 50 cents last week on the market. They received the third-lowest rating in years and are suffering greatly from the flagging economy. Unfortunately, all of the casinos in the United States are not faring well in what is usually a recession proof business.
Sources are claiming that the company has retained the services of Kirkland & Ellis LLP for their bankruptcy counsel and Lazard Ltd. as their financial advisors. If they file for a protection motion, it is expected to be registered in Wilmington, Delaware. One of the company’s lenders has retained Houlihan Lokey Howard & Zukin as their financial advisors and the bondholders are using Jefferies & Co. The sources went on to say that the filing will not be pre-packaged and there is currently no plan in place to resolve the issue. Officials at Tropicana Entertainment LLC have refused to comment.
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