The operator of the Tropicana Casino and Resort, which was featured in the films Viva Las Vegas and Diamonds Are Forever, filed for bankruptcy protection in May 2008. Canadian private equity firm Onex Corp. (TSX: OCX) has succeeded in taking over the Las Vegas icon.
Onex's main buyout fund has cobbled together a stake in the casino's senior debt that will make it the largest shareholder when a restructured Tropicana emerges from bankruptcy protection.
Though Onex will gain control of a prime location in one of the hottest spots in the city and one of the busiest pedestrian intersections in the world, it comes at a time when the fortunes of sin city are suffering due to economic conditions.
Room rates have plunged and passenger traffic into the city's airport is down 14% in the first three months of the year. But Onex founder and CEO Gerry Schwartz believes that gambling is a growth industry, and that investing in Las Vegas is a long-term value because the city has historically weathered downturns better than expected.
The deal is a hit for Onex after a couple of strikes: the buyout firm has tried to acquired casino properties in British Columbia and Illinois in the past year, and it also lost control of one of its own companies, U.S.-based Cosmetic Essence Inc.
However, the sale of its stake in Canadian movie-theater chain operator Cineplex Galaxy Income Fund contributed to a jump in profits in the first quarter. In its earnings report, Onex also said that it expects the recession will continue throughout the balance of 2009.
Onex expects to take control of the Tropicana later this year, subject to regulatory approvals.
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Reader Comments (Page 1 of 1)
5-15-2009 @ 6:52PM
Suzanne said...
Hopefully they will tear it down! That place is such an eyesore...it always creeped me out going in there!
5-16-2009 @ 8:33PM
Lar said...
Regulations ect. need passed before the Casino can change hands
I really thought we were living in America, Land of the free
Well, We ain't.
Was I fighting for this Country?????
This Country has done nothing for the people, That is why we have al these poor folks
John Kennidy was wrong to say you should do more for the Country
You can not forget the people and win
Just look at Cuba
Dictatorship
No Obama is not a socialist!
5-17-2009 @ 2:50AM
HOWIE SUBNICK said...
Hey "Lars", Ther's a plane out of this country every thirty seconds! Don't let the door slap you in the ass on the way out!