Tropicana on track to exit bankruptcy

LAS VEGAS, Nevada -- Billionaire financier Carl Icahn will be the largest owner of Tropicana Entertainment when it becomes the first gaming company to emerge from bankruptcy since the recession, likely on Jan. 27.

The Nevada Gaming Control Board gave preliminary approval Wednesday to the Las Vegas-based gaming company's new ownership and financial structure plans.

If approved, Tropicana Entertainment would own nine casinos in five states including the River Palms and the Tropicana in Laughlin, and the MontBleu in Lake Tahoe once it exits bankruptcy.

Tropicana Chief Executive Officer Scott Butera said the company has hearings in Louisiana, Mississippi, Indiana, New Jersey and back in Nevada this month.

Icahn now controls 47.5 percent of the company's debt. Nearly 150 secured creditors each control less than 5 percent.

Icahn and two of his representatives will have seats on the company's seven-member board. The board will also include Butera and former Station Casinos Chief Financial Officer Glenn Christenson.

Contacted after the hearing, Christenson, who already sits on the boards of NV Energy and First American Financial, said that he was approached by some of Icahn's associates in the spring about joining the board when the company emerges from bankruptcy.

"Being involved in something with Icahn interested me," said Christenson, who retired from Station Casinos in 2007 after 17 years. "I thought I could learn something from him."

Icahn's investment in Tropicana Entertainment marks his return to the casino industry. He sold American Casino & Entertainment Properties, which owns the Stratosphere and Arizona Charlie's, in February 2008 for $1.3 billion. Icahn had acquired those properties in bankruptcy or at depressed values before selling at a profit.

Tropicana Entertainment was owned by Kentucky-based hotelier William Yung III before the company filed for Chapter 11 bankruptcy in May 2008.

To help the company emerge from bankruptcy, a finance group led by Icahn Capital will provide Tropicana Entertainment with $150 million in credit. The money will be used to pay back about $70 million in bankruptcy financing and fees with the rest left for working capital. Tropicana Atlantic City, which was bought by an investment group led by Icahn, will be brought into Tropicana Entertainment.

The company does not include the Tropicana on the Strip. That company was bought by a group of investors during bankruptcy and will continue to be owned separately by an investment group led by Canadian private equity firm Onex Corp. and former MGM Grand Inc. executive Alex Yemenidjian.

Tropicana Entertainment sued the new owners of the Tropicana on the Strip in July claiming the owners did not acquire rights to use the name.

"The Tropicana name is an important asset of our company," Butera said after the hearing. "If there's an opportunity to license that name for an appropriate license arrangement, that's one avenue. But if there isn't, it is an asset that is important to us."

Butera declined to comment on Icahn's bid for the Fontainebleau Las Vegas and whether that property could become part of Tropicana Entertainment if Icahn successfully acquires the stalled project.

"That is not something we're involved in," Butera said.

To help the company emerge from bankruptcy, a finance group led by Icahn Capital will provide Tropicana Entertainment with $150 million in credit.