Onex Makes a Vegas Bet
The Canadian PE firm acquires the majority equity stake in the Tropicana Las Vegas Hotel & Casino.
July 2, 2009
Onex Corp. will buy the majority equity stake in the Tropicana Las Vegas Hotel and Casino as the property looks to emerge from bankruptcy; the company’s secured debt holders—of which Onex was largest—will get 100% of the equity in the resort property.
The deal comes at a time when even the gaming industry is feeling the recession’s pinch; Las Vegas property values have been hit disproportionately hard by the economic downturn. This is not the first Tropicana property to hit distress; the separate New Jersey property based in Atlantic City is proceeding with a 363 bankruptcy sale that is being overseen by retired Justice Gary S. Stein, the state-appointed trustee and conservator of the company.
Station Casinos has also been particularly hard hit by the recession; and must come up with a restructuring plan due later this month. It proposed a prepackaged bankruptcy plan earlier this year to restructure and eliminate about half its $5.7 billion debt.
Also, in April, distressed Las Vegas-based Casino operator Harrah’s Entertainment exchanged $5.5 billion in debt for $3.4 billion in new 10% notes due 2018. Sin industries being what they are—above all, typically dependable, aside from in a severe recession—each of these properties represents a bargain investment for those who now get equity stakes, albeit a gamble. But then again, this is Vegas.
Alex Yemenidjian immediately assumes the role of chairman and chief executive of the company. Yemenidjian’s history with casinos is a lengthy one: he was chairman and chief executive of MGM Inc. for six years, was president of MGM Mirage for four and was an executive with Tracinda Corp.—which owned the Vegas property—for seven years prior. Other roles include his serving as operating and financial chief.
Tropicana's other casinos are in Evansville, Indiana; Vicksburg, Mississippi; Baton Rouge, Louisiana; Greenville, Mississippi; and Laughlin and Lake Tahoe, Nevada.
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