May 5, 2009 / 7:36 PM / 10 years ago

UPDATE 1-Bankruptcy court OKs Tropicana reorganization plan

(Adds plan details)

May 5 (Reuters) - Tropicana Entertainment LLC TRPET.UL, which owns the Tropicana Casino & Resort on the Las Vegas strip, said on Tuesday that a federal bankruptcy court had approved its plan to emerge from bankruptcy, allowing it to shed billions of debt and reduce its interest expenses.

The re-organization, which includes $150 million in exit financing from Carl Icahn’s Icahn Capital LP, will eliminate about $2.4 billion in debt, and save Tropicana $125 million a year in interest payments, Tropicana said.

The court action clears the way for the company to receive approval to implement the plans from gaming regulators in Indiana, Louisiana, Mississippi, Nevada and New Jersey, according to Tropicana.

“We are now equipped not only to endure the economic circumstances facing the casino gaming industry today, but also to take advantage of opportunities as the industry rebounds in the years ahead,” Scott Butera, chief executive of Tropicana, said in a statement.

Tropicana had obtained creditor approval to split into two operating companies, one comprised of its assets outside Las Vegas, the other made up of its Tropicana resort in Las Vegas, with each being owned by separate creditor groups.

Tropicana’s reorganization plan calls for the money provided by Icahn Capital to be used to repay $65 million in “debtor-in-possession,” or bankruptcy, financing.

Tropicana filed for bankruptcy protection in May 2008, citing a downturn in consumer spending.

Casino companies, burdened by large debt loads, have suffered since last year as a gambling boom fizzled in Las Vegas.

The case is In re: Tropicana Entertainment LLC, U.S. Bankruptcy Court, District of Delaware, No. 08-10856.

Reporting by Santosh Nadgir in Bangalore

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