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El Dorado Loses Ground in Tropicana Bankruptcy

LAS VEGAS-Tropicana can now decide not to sell its Indiana casino without penalty, an option not included in the sale agreement it signed this spring with El Dorado Resorts of Reno, NV.

By Brian K. Miller | Updated on September 18, 2008

LAS VEGAS-A bankruptcy judge this week approved Tropicana Entertainment LLC’s motion to reinitiate the sale of its Evansville, IN casino, but it’s not clear the company actually intends to sell it. Regardless, the property is now headed for the auction block the week of Nov. 10. The minimum bid will be $228.1 million, which is the base amount for which it agreed to sell the riverboat property to El Dorado Resorts LLC of Reno, NV, earlier this year, plus $7-million in break-up fees that would go to El Dorado if it selected another offer.

The uncertainty about Tropicana’s intentions comes from its successful alteration of the sale agreement allowing it to opt out of selling to anyone, and without penalty. The original agreement allowed for Tropicana to seek a higher and better offer during an interim period but did not allow it not to sell, and El Dorado had the right to the aforementioned break-up fee if Tropicana chose another, higher offer.

“This sale is not a sale,” El Dorado proclaimed in its unsuccessful objection to Tropicana’s revised terms, according to court documents reviewed by GlobeSt.com. “Tropicana asserts that its ‘proposed procedures will increase the likelihood that Debtors will receive the greatest possible consideration for the Evansville Assets in a sale in the immediate future because they will ensure a competitive and fair bidding process.’ Eldorado believes that the opposite is true. That it may not sell–is likely to deter bidding because prospective bidders are unlikely to be willing to expend the monies necessary to do due diligence, arrange financing and obtain regulatory approval in the absence of an actual intent to sell.”

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