From the Wall Street Journal

Tropicana Plans Bankruptcy Filing
As Casino Glitz Takes Economic Hits

Casino operator Tropicana Entertainment LLC plans to file for bankruptcy in what would be the largest corporate filing of the year, a startling reversal of fortune for the new owner of one of the most historic casinos in Las Vegas.

Kentucky-based Tropicana -- with a small casino kingdom that includes the famed Tropicana Resort & Casino in Las Vegas and a host of small regional casinos -- missed an interest payment Friday on a $1.32 billion loan with lender Credit Suisse Group, said two people familiar with the matter. Tropicana isn't expected to make the payment, these people said. Missing the payment terminates a forebearance agreement the company had with bondholders, putting further pressure on the gambling company.

AP Photo/Jae C. Hong

The Tropicana Resort & Casino in Las Vegas

The problems at Tropicana, which has 11,000 employees and about $1 billion in annual sales, come as the casino industry as a whole is struggling. It also underscores weak performance in Las Vegas, which has seen major casino projects canceled or delayed and gambling revenue decline as the economy stumbles.

Scott Butera, president of Tropicana Entertainment LLC confirmed that the company planned to file for bankruptcy by the end of business Monday. Mr. Butera, who joined the company a month ago intent on restructuring it, said the filing is an important step toward getting the company back on solid financial ground. "I really view this as a positive step," Mr. Butera said Monday. He said the company is "cash-flow positive and in very constructive dialogue with our lending groups."

The planned bankruptcy filing is the latest problem in an ill-fated foray into the gambling industry by William Yung III, who also owns and operates the large hotel-property owner Columbia Sussex Corp. Columbia Sussex won't be part of the bankruptcy filing, said these people.

Mr. Yung expanded his small presence in the gambling industry in 2006 by besting competitors in a bidding war for Aztar Corp., which owned the Tropicana Las Vegas casino and other properties. The resulting $1.94 billion deal dropped jaws in the industry because it set record prices for land -- as much as $30 million an acre -- on the Las Vegas Strip, which was in the midst of a development frenzy.

Just two years later, Mr. Yung is struggling to keep the company together. After taking over, Mr. Yung began making steep cutbacks at some of the properties, including the Tropicana casino in Atlantic City, N.J.

The cutbacks there led to trouble late last year when New Jersey gambling regulators took the unusual step of stripping the company of its license to operate a casino. Regulators said that, in the wake of the budget cuts, the casino was so poorly operated that it was in violation of state regulations. The casino and hotel are now under state control and up for sale; it is not part of the bankruptcy filing.

Tropicana has $2.67 billion in rated bank and bond debt, according to Moody's Investors Service. The largest previous bankruptcy filing of the year was Quebecor World Inc., which had rated debt of roughly $1.8 billion.

Tropicana bonds, which come due December 2014, traded around 50 cents on the dollar last week. Tropicana has lined up debtor-in-possession financing with Silver Point Capital LP, a hedge fund and investment firm.

Mr. Butera, Tropicana's president, couldn't specify how long the company would be in bankruptcy. He did say the company isn't planning any layoffs, or planning to sell any of the 11 properties in its portfolio.

"We're taking a very strong approach," he said. "We're doing this to have capital to invest in our people and our properties."

Write to Jeffrey McCracken at jeff.mccracken@wsj.com and Tamara Audi at tammy.audi@wsj.com

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