Company board granted control over Tropicana

LAS VEGAS, Nevada -- The Nevada Gaming Commission on Thursday gave unanimous approval to hand over operational control of bankrupt Tropicana Entertainment to a four-person board while its members undergo investigation for licensing in the state.

The decision, which commission Chairman Pete Bernhard described as an extraordinary procedure, will let the company continue operations while it restructures under bankruptcy protection.

"This particular structure at this particular time under these particular circumstances justify us approving (the structure)," Bernhard said. "It's not something we would do with any company at any time that's in financial distress."

The board's formation is part of a settlement in Delaware between bondholders and embattled hotelier Bill Yung III to remove him from influencing Tropicana Entertainment's direction following a Chapter 11 bankruptcy filing in May.

Chief Executive Officer and President Scott Butera said the company must file its final restructuring plan with the Delaware courts on Jan. 12.

"We don't take any advice or direction from him," Butera told regulators when they asked about Yung's involvement in the company. "He's anxious to get this resolved and move on."

The hearing comes a day after the Tropicana reached a tentative contract agreement for 750 employees with the Culinary Local 226 and Bartenders Local 165.

The workers, who had been under an extended contract since May 31, 2007, are scheduled to hold ratification votes today.

Yung, who acquired the Tropicana with the $2.1 billion buyout of Aztar Corp. in January 2007, ran the company as its sole director and top executive until earlier this year.

However, when Yung lost his New Jersey gaming license in December, bond holders of nearly $3 billion in debt forced the company to default on some of its debt covenants, which led to the bankruptcy.

Butera, a former Wall Street banker who helped recapitalize Donald Trump's gaming company, was brought in as Tropicana Entertainment's president in March by advisers to Yung working on the early stages of the restructuring.

He became chief executive officer in June when Yung was forced out under the agreement with creditors.

Butera told the commission that while Yung still technically owns equity in the company, the debt holders, which are made up mostly of mutual funds and private equity firms, will likely become the owners early next year.

The new board is led by Chairman Thomas Benninger, a restructuring banker and founding partner of Global Leveraged Capital. His father, the late Fred Benninger, was a longtime business partner of Kirk Kerkorian and head of MGM Grand Hotels.

Benninger told the commission that the challenge of being involved in the restructuring was what interested him when he was approached.

"Having left investment banking some years ago, in some sense, I miss the game of restructuring," said Benninger, who was an adviser to Butera during the Trump restructuring. "Frankly, I thought it would be an opportunity to get a little more involved in the gaming business from a different perspective."

Other board members are Butera, former Metro-Goldwyn-Mayer Studios Chief Financial Officer Michael Corrigan and former New Jersey Casino Control Commission Chairman and Chief Executive Officer Bradford Smith.