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LAS VEGAS-Secured lenders in the Tropicana Entertainment LLC Chapter 11 bankruptcy case told the court on Monday that it wants the debtor to complete the sale of its Evansville, IN casino as agreed to, prior to filing for bankruptcy.

The statement, made by the Committee of Senior Secured Lenders created by the bankruptcy court, was made in response to a motion filed earlier this month by would-be buyer Eldorado Resorts LLC of Reno, Nev., to compel Tropicana to decide whether to move forward with the sale prior to the existing Sept. 28 deadline.

Earlier this year, Eldorado agreed to buy Casino Aztar for at least $220 million [in the form of cash and a promissory note] and as much as $245 million, depending on the property’s performance during the first year under the new ownership. Tropicana declared bankruptcy about two months later, technically allowing them to get out of the agreement.

The secured lenders want the deal consummated because the sale–which allows for Tropicana to seek higher and better offers during an interim period–would maximize sales proceeds in support of Tropicana’s ultimate reorganization. The agreement allows for Tropicana to seek higher and better offers during an interim period.

“The debtors have a financed commitment from Eldorado for the Evansville casino that was negotiated in a better market, without the overhang of these pending Chapter 11 cases,” states the steering committee. “If the Debtors permit the ‘bird in the hand’ to escape and then Debtors subsequently decide [or are compelled to] sell Aztar Indiana, there are no assurances that the Debtors would be able to find another bidder willing to pay as much as Eldorado or that any bidder would be able to find financing, in this difficult business climate for the gaming industry.”

Eldorado wants the deal to go through in part because it has already paid hundreds of thousands of dollars to maintain the financing commitment it has in place to close on the acquisition. In its motion, Eldorado states the sale was tentatively agreed to in the first place “to avoid adverse action by the Indiana Gaming Commission” and that the deal with the gaming commission required a third party to oversee operation of the casino. The “attorney-in-fact,” as the party is called, will assume the power to sell the asset if the sale is not consummated by Sept. 28, which could result in a lower sale price.

As well, Eldorado states in its argument that it has expended $850,000 already to maintain its acquisition financing commitment and expects to expend an additional $1 million before the deal is decided one way or the other. It is currently paying $196,000 per month to maintain the financing. After Sept. 30 that cost will increase to $244,000 per month, Eldorado said. “The Debtors are not harmed by deciding now whether to proceed with the Purchase Agreement whereas continued delay imposes a significant monetary cost on [Eldorado],” the company stated in its motion.

While agreeing with Eldorado that it is important to commence the sales process and that a termination of the existing sales agreement would be harmful to the Debtors’ estates, the steering committee says it will not support Eldorado’s motion to compel a decision prior to the deadline. That is, unless the Debtors fail to move forward with the sale per the existing purchase agreement. Tropicana filed a motion on Aug. 21 to initiate the sale process but retained the right to withdraw the motion, which is what has the steering committee concerned it may not happen.

Tropicana is a subsidiary of hotel owner Columbia Sussex Corp., which started down the path toward its May bankruptcy filing for Tropicana as soon as it acquired the casinos from owner Aztar Corp. in January 2007 for $2.1 billion in cash following an intense bidding war. For that story, click here .

If the sale of Tropicana’s Evansville is reinitiated and a higher or better bid comes along during the process, Tropicana is required to pay Eldorado a break-up fee of $6.6 million and to reimburse Eldorado for as much as $500,000 in related expenses.

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