Tropicana asks court to rule against license denial default; trustee takes over Atlantic City resort

By Caroline Salls

Pittsburgh, Feb. 14 - Tropicana Entertainment, LLC said it has requested a court ruling that the New Jersey Casino Control Commission's gaming license denial for the Tropicana Atlantic City Casino Resort does not constitute an event of default under its 9 5/8% senior subordinated notes due 2014, according to a lender presentation filed with the Securities and Exchange Commission.

A hearing on Tropicana's motion is scheduled for Feb. 26.

In addition, the New Jersey Casino Control Commission has ordered Adamar, the company that manages Tropicana Atlantic City, to turn over its management responsibility to a trustee until the resort can be sold.

Former New Jersey Supreme Court justice Gary S. Stein has been appointed trustee. According to the 8-K, Stein has agreed to make monthly payments of 43% of Tropicana Entertainment's credit agreement obligations.

Stein is also charged with selling Tropicana Atlantic City within 120 days of Adamar's management license denial date, and he is required to consult with Tropicana Entertainment in connection with the sale.

The offering memorandum for the Tropicana Atlantic City sale will be distributed the week of Feb. 18, and bids are expected to be due in late March.

The trustee is expected to sign a sale agreement by April and close the sale by June.

In addition, Tropicana said preliminary bids were due Thursday for the sale of its Evansville, Ind., property, and a definitive contract could be entered into by March.

As previously reported, purported indenture trustee Wilmington Trust filed a complaint in late January in the Chancery Court for 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 alleged that some of Tropicana's officers 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.

According to a previous 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.

However, 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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