155 East Tropicana can't fund financial commitments, exploring options

By Caroline Salls

Pittsburgh, Nov. 13 - 155 East Tropicana, LLC does not expect to be able to generate enough cash flows from operations to fund its financial commitments over the next year, according to a 10-Q filed with the Securities and Exchange Commission.

In addition, the company said it cannot be sure that it will be able to raise additional capital.

Based on expected future operations, the company does not believe that its $5.6 million of cash on hand as of Sept. 30 and expected cash flows will be adequate to meet its total financial obligations, including operational expenses, debt service on equipment leases and 155 East Tropicana's senior secured credit facility, capital expenses and scheduled interest payments on its 8¾% senior secured notes.

According to the 10-Q, the company has entered into discussions with the noteholders and the credit facility lenders to attempt to negotiate forbearance agreements in connection with credit agreement defaults.

In addition, 155 East Tropicana has hired a financial adviser to assist with its evaluation of financial and strategic alternatives, which could include a recapitalization, refinancing, restructuring or reorganization of its obligations or a sale of some or all of its business.

If it cannot secure a forbearance or enter into a transaction to address its liquidity and capital structure, the company said the noteholders could accelerate repayment of the $141.4 million due and the credit facility lenders could accelerate the $14.5 million due on the facility.

155 East Tropicana said it would need to refinance or restructure the debt payments if they were accelerated. If it cannot complete a refinancing or restructuring, the company said it could be forced to file for Chapter 11 bankruptcy.

As a result of its liquidity issues, the company said there is substantial doubt about its ability to continue as a going concern.

155 East Tropicana owns the Hooters Casino Hotel in Las Vegas.

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