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Arnold M. Knightly

Tropicana CFO quits, takes new job

27 November 2007

LAS VEGAS, Nevada -- The embattled parent company of the Tropicana on the Strip took another blow with the resignation of the company's chief financial officer after only 120 days in the position.

John Jacob, senior vice president and CFO of Tropicana Casinos and Resorts, resigned effective Friday, leaving the company to fill its top financial executive position for the second time in five months.

The resignation comes while the company is undergoing a contentious licensing renewal hearing in New Jersey, negotiating a new contract with the Culinary union, renegotiating bank loans and trying to secure financing for a $2.5 billion redevelopment of the company's Strip property.

"He got an offer from his new employer he couldn't pass up and that's all there really is to it," said Hud Englehart, spokesman for parent company Columbia Sussex Corp.

He said the departure was not tied to an accounting mistake that was announced during the company's third-quarter earnings call Nov. 13.

Jacob replaced former CFO Richard FitzPatrick, who resigned this summer after a year in the position.

The resignation comes during a year of management changeover within the company, including naming new general managers at the Tropicana properties locally and in Atlantic City.

Continual turnovers continue to influence investor confidence in the leveraged-finance community, said Dennis Farrell Jr., a gaming analyst with Wachovia Capital Markets.

"Not having a CFO only increases the level of uncertainty in company management," he said. "To resolve the issue, we hope management will attempt to lure a respected gaming executive to steer the company in the right direction."

Jacob was CFO of a publicly traded garden tool company in Columbus, Ohio, from 1999 to 2006. FitzPatrick had held CFO positions with various real estate investment firms before joining the company.

Andrew Zarnett, a gaming analyst with Deutsche Bank, said the CFOs could have been unaware of the financial pressures tied to running gaming companies when they accepted the positions.

"They have numerous issues to deal with," Zarnett said. "Dealing with those issues are complicated and time consuming in a very pressured environment."

Tropicana Casinos and Resorts is a subsidiary of the Columbia Sussex Corp., a privately held company based in Fort Mitchell, Ky.

Testimony is scheduled to resume Wednesday for the company's relicensing hearings in Atlantic City before the New Jersey Casino Control Commission with a vote by gaming regulators possibly later this week.

The company is facing opposition to its license from UNITE-HERE Local 54 claiming the company has cut a quarter of the Atlantic City hotel's work staff, which has left the nearly 2,100-room hotel and casino unclean and a hazardous workplace.

The company's planned $2.5 billion redevelopment on the Strip seems very unlikely in the near future given the current credit market, Zarnett said.

"In reality, they are as aware as the market is that securing financing for a Las Vegas development project at this time is highly unlikely," he said. "They have many more issues to deal with rather than that."