Tropicana receives payment demand on 9 5/8% notes; indenture trustee replacement disputed

By Caroline Salls

Pittsburgh, Jan. 31 - Tropicana Entertainment, LLC has received a notice of default and acceleration on its 9 5/8% senior subordinated notes due 2014 as a result of the New Jersey Casino Control Commission's recent refusal to renew the company's license to operate the Tropicana Casino and Resort in Atlantic City, according to an 8-K filed with the Securities and Exchange Commission.

Tropicana said the notice declared the principal and interest on the notes immediately due and payable, but the company said it believes that no default has occurred and the acceleration is therefore invalid.

The company said purported indenture trustee Wilmington Trust has filed a complaint in the Court of Chancery of the State of Delaware against the company, Tropicana Finance Corp., Aztar Corp. and some Tropicana officers alleging that an event of default has occurred as a result of the license refusal.

The complaint also alleges that some of Tropicana's officers have breached their fiduciary duties to the company.

In addition to asking the court to confirm that an event of default has occurred, Tropicana said Wilmington is also seeking an injunction against the sale of the company's casino properties in Evansville, Ind., and Vicksburg, Miss.

Tropicana said Wilmington is also seeking an injunction against the sale of the company's casino property in Baton Rouge, La., but Tropicana has no intention of selling that property.

Tropicana said it will vigorously oppose the complaint, which it does not believe Wilmington had the authority to file.

According to the 8-K, the company received a notice that a majority of the noteholders had replaced indenture trustee U.S. Bank, NA with Wilmington Trust Co.

U.S. Bank said the appointment of Wilmington Trust cannot be effective because the parties signing the appointment letter did not comply with the notes indenture.

Tropicana said it agrees with U.S. Bank, and it believes that U.S. Bank is still the indenture trustee.

Tropicana Entertainment is a Fort Mitchell, Ky.-based gaming entertainment provider.

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