By Maureen Hayden
The parent company of Casino Aztar in Evansville continues to face more financial woes as it continues its fight to hang on to its flagship Atlantic City, N.J., property.
The Reuters news service reported today that Moody's Investors Service has cut its rating on Tropicana Entertainment by two notches, saying the casino company's risk of default has increased after an adverse court ruling. Last Friday, a court in Delaware ruled that the company is in technical default on its bond debt because its Atlantic City casino and resort were transferred to a court-appointed trustee after the company lost its New Jersey state gaming license in December. The result? A technical default gives bondholders the right to demand immediate repayment of their debt.
Tropicana Entertainment is a privately held company launched by Columbia Sussex owner William "Bill" Yung III in 2006 after he successfully outbid competitors for the Aztar properties, including Casino Aztar in Evansville.
After New Jersey regulators yanked his license to operate in their state, Yung said he would put the Evansville casino and other properties up for sale to pay off his $1 billion-plus debt. The Moody's report issued today sounds ominous: "If Tropicana is unable to cure the default, a bankruptcy filing is possible," Moody's said in a statement released publicly. It warned that even if the company can avoid default and sell its Atlantic City, Evansville, and Vicksburg, Miss., properties as planned, Tropicana's credit profile will deteriorate significantly.
Tropicana's rating went down to a "Caa3," which is nine steps below investment grade. Analysts are now saying the Friday court ruling increases the likelihood of Tropicana filing for bankruptcy.
Meanwhile, Tropicana Entertainment lawyers are fighting in court to get back their New Jersey license. They're asking the New Jersey appeals court to overturn the loss of the casino license, arguing that the New Jersey Casino Control Commission's decision to deny its license renewal was "arbitrary, capricious and unreasonable." New Jersey regulators cited numerous problems at the Atlantic City casino and resort, including the layoff of some 900 employees and deteriorating conditions at the hotel and resort.