Tropicana draws up preliminary business plan focused on internally funded improvements

By Caroline Salls

Pittsburgh, Nov. 10 - Tropicana Entertainment, LLC has formulated a preliminary business plan summary, which is expected to serve as a basis for the company's Chapter 11 plan of reorganization, according to a company news release.

The company said the plan emphasizes internally funded operational improvements and high-priority capital investments.

"The summary is intended to give our constituents timely insight as to the performance of our properties as well our current thinking about what we need to do to capitalize on our widely recognized brand name and position Tropicana as the high quality, value priced competitor in our markets," chief executive officer Scott C. Butera said in the release.

Butera said that the plan addresses all of the properties in Tropicana's equity portfolio without regard to the status of operational control or potential property sales.

According to the release, the plan estimates that the 11 Tropicana properties will produce 2008 net revenue of $995 million and EBITDA of $129 million.

The plan projects $64 million in capital expenditures from internally generated cash, but notes that performance improvements could accelerate if the company can acquire additional capital resources to support its post-Chapter 11 business.

"Given the uncertain state of capital markets, our plan is focused on improvements that can be internally generated without reliance on outside funds," Butera said in the release.

"Initially, our efforts will center on areas where there are immediate returns on investment ranging from improved slot products and property configurations to normalized labor practices, consolidated back room operations and enhanced restaurant menus and food quality.

"We will be emerging into one of the most difficult markets for gaming and hospitality services ever experienced by the industry.

"The key for us will be to stabilize our revenue base and grow profits through aggressive cost management; strategic investments in products, services and facilities; targeted customer development and retention programs; and a more motivated and service-driven staff.

"As we make progress in these areas, Tropicana ought to be well-positioned to take advantage of funding and other opportunities when capital markets improve."

Tropicana, a Fort Mitchell, Ky.-based gaming entertainment provider, filed for bankruptcy on May 5, 2008 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 08-10856.

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