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LAS VEGAS-Tropicana Entertainment LLC this week began distributing ballots to creditors who will vote on the company’s plan for reorganization under Ch. 11 of the US Bankruptcy Code. The owner of the Tropicana resort on the Las Vegas Strip says it has reached agreements with those representing all of the company’s funded debt.

The plan generally calls for a substantial portion of the company’s $2.74 billion of long-term debt to be converted to common stock, thereby substantially deleveraging the company’s balance sheet and, in theory, leaving it with a serviceable amount of debt and positive cash flow. As for unsecured debt, the plan calls for it to be discharged in exchange for warrants, interests in a litigation trust and cash for certain creditors. Lastly, the plan would cancel all the equity interests of former owner William J. Yung III, who will not hold any positions with the company. Creditors have until April 17, 2009 to submit their ballots.

The plan would split the company into two entities. The OpCo would hold 10 of the company’s 11 resorts while LandCo would be comprised solely of the Tropicana Las Vegas. The secured component of OpCo’s $2.3 billion indebtedness would be converted to common stock and the unsecured component canceled, while all $442 million of LandCo’s secured debt would be converted to common stock. Beyond that, Tropicana says its five-year plan calls for the company to grow its revenue base, maintain its current level of operating expenses and improve net income. During that period the company expects to make $275 million of capital investments to refurbish and revamp its casinos and resorts.

Tropicana Entertainment filed for Chapter 11 bankruptcy in May 2008 after it defaulted on nearly $2.7 billion in bonds. The default was prompted by the New Jersey Casino Control Commission’s vote Dec. 12, 2007, not to renew the license for Tropicana’s Atlantic City property, its biggest asset. In August 2008, Tropicana president and CEO Scott Butera was named to the four-man team appointed by the courts to guide the company through bankruptcy. In September, negotiations began with the Cordish Co. for the sale of the Tropicana Atlantic City for $700 million but the deal has since stalled.

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