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Posted At : January 15, 2009 01:01 PM | Posted By : D McKee
Related Categories:
MGM Mirage,Tropicana Entertainment,Economy,Columbia Sussex,Wall Street
Secured creditors of Tropicana Entertainment are being asked to take haircuts of 14-27%, as details continue to emerge of the company's reorganization proposal. The bigger shave would go to debtors of the company's 10 non-Vegas properties, the value of whose stake would be written down to $915 million.
Those who are owed money by the Tropicana Las Vegas (which would be spun off into a stand-alone TropEnt subsidiary) would reduce their claims to, if my calculations are correct, $376 million and change. Which means that, if CEO Scott Butera's #1 priority is to balance the ledger, a Strip property that stock and real estate analysts were valuing in the $1 billion-$1.2 billion range back in '06 might soon be had for less than $400 million -- or just over $11 million an acre.* How times change.
(* -- Obviously this does not take into as-though-redeveloped valuations, ongoing operating costs, EBITDA multiples, etc. But if MGM Mirage really is having trouble getting $1.2 billion for The Mirage in the present economy, then asking a third as much for the not-sought-after, rehabilitation-needing Trop seems quite plausible.)
Subordinated debtors, though, are being asked to take it in the shorts: Settle for less than $20 million of nearly $1 billion in debt. TropEnt's former CEO, William J. Yung III, may be going down but he continues to inflict collateral damage along the way.
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