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Arnold M. Knightly

Tropicana owner keeps focus on future

20 October 2008

ATLANTIC CITY, New Jersey -- Tropicana Entertainment will continue to reinvest in its other properties and look for new growth opportunities even if its efforts to regain control of its flagship property in Atlantic City fail, the company's top executive said.

"There is no one particular asset that is so important that it will derail us if we lost it," company President and Chief Executive Officer Scott Butera said. "If we had to move on, or our (debt holders) decided it was appropriate for us to move on, that wouldn't derail the vision for the company at all."

The New Jersey Supreme Court will hear oral arguments Nov. 17 of an appeal of state regulators' decision to deny Tropicana Entertainment a gaming license to operate the Tropicana Atlantic City, the company's largest property based on size and revenue.

Tropicana Entertainment executives have been meeting with regulators, politicians and union officials in an effort to regain control of the Atlantic City property.

The high court's decision to hear the appeal could delay the pending sale of the Atlantic City property. The state-appointed conservator announced in late September a deal to sell the property to Baltimore-based Cordish Co. for $700 million in cash and debt.

The New Jersey Casino Control Commission decided Wednesday to prohibit the conservator from continuing the sale process until Oct. 29, when regulators next meet.

Butera said the sale could be delayed from nine months to a year while the court reviews the company's appeal.

"The significance of the appeal is nothing can happen with the asset until the appeal has been tried," the 41-year-old Butera said. "At a minimum, we have time to prove ourselves."

New Jersey Casino Control Commission spokesman Dan Heneghan said regulators asked the court to expedite its review of the appeal, which a state appeals court denied in July.

"There is an extensive record both before the commission and before the appellate division," Heneghan said. "We're confident the court can review that record and rule in this matter expeditiously."

Cordish Co. Chairman David Cordish was out of the country and unavailable for comment.

Butera said that despite its efforts to regain control of the Atlantic City property, the company would support a sale if a fair price could be reached. However, with the credit markets squeezed tight, he said he doesn't believe anyone can come in and pay a fair price, which he says is at least $950 million.

"It has always been our feeling, given the economy, given that banks are out of business right now, there's no credit market as we sit here today," Butera said. "We always thought it would be hard for someone to come in and even if they wanted to pay a fair price get financing, to be able to close on a transaction."

Meanwhile, the company is proceeding with efforts to reinvest in its other properties, including plans to spruce up the 51-year-old Tropicana on the Strip, he said. Plans are in the works to possibly add a nightclub and a food court overlooking the pool. The company also wants to catch up on long-needed maintenance at the Strip property.

With the corporate offices now in Las Vegas on the second floor of the Tropicana, Butera said executives can attend more immediately to the property's needs and plan for its future.

Butera said plans embattled hotelier Bill Yung III introduced to redevelop the property into a 10,000-room hotel-casino resort have been permanently scrapped. He expects any redevelopment of the property to be at least "five to seven years out."

Tropicana Entertainment plans to petition the New Jersey Casino Control Commission to reconsider a December decision to deny Yung a gaming license. The denial followed regulatory violations, layoffs and health code concerns at the Atlantic City property.

Yung has slowly been phased out of the company's operations since the company filed for Chapter 11 in Delaware in May. Butera contends Yung has signed away all his rights and is now only a stakeholder with no input in the company's operations.

"What we've been saying in New Jersey is this is a complete, new company," Butera said. "When you deny a license it is more about the individual than the company. So the individuals that were involved in the license denial are no longer part of this company."

Yung had operated the company as chief executive officer and sole director when the license was denied.

Yung, a successful hotelier with his Columbia Sussex Corp., will probably no longer own the company following the restructuring, Butera said.

"At this point, (Yung) is just waiting to see what the result is when we emerge (from bankruptcy)," Butera said. "He won't be an owner of the company. Nor do I think Mr. Yung wants to be an owner of the company. He's been very successful with Columbia Sussex and he wants to return to that business."

Columbia Sussex continues to own and operate The Westin on Tropicana Avenue, which has a 15,000-square-foot casino.

The gaming company owns 11 casinos in the United States including five in Nevada -- the Tropicana, the Horizon and the MontBleu in Lake Tahoe, and Tropicana Express and River Palms in Laughlin.

The move of the executives to Las Vegas marks the first time since 1979 the company operating the former "Tiffany of the Strip" has been based at the property.

Previous owners Ramada Inns and Aztar Corp. operated from their corporate headquarters in Phoenix.

Tropicana owner keeps focus on future is republished from