|By Howard Stutz, Las Vegas
Review-JournalMcClatchy-Tribune Business News
Nov. 17, 2006 - With the bulk of the regulatory approvals behind them, executives from Columbia Sussex Corp. now want to turn their attention toward alleviating any concerns being felt by employees at the Tropicana as the privately held Kentucky-based company prepares to take over ownership of the aging Strip casino.
The Nevada Gaming Commission granted final approval Thursday for Columbia Sussex to complete its $2.75 billion purchase of Aztar Corp., endorsing the company's plans to significantly redevelop the Tropicana's 34-acre site along the Strip.
Columbia Sussex President Bill Yung III said the financing package for buying four Aztar casinos should be in place by mid-December. Before then, the company wants to talk with employees at the Tropicana, the primary asset in the overall purchase.
"The Tropicana is a priority and hopefully we can get in there beginning next week and meet with the employees," Yung said after gaming commissioners took about 30 minutes to approve the transaction.
Yung said that other than certain management level positions, he expects to retain the bulk of the Tropicana staff.
"Most employees will stay, but I think they're having a very difficult time keeping employees with the uncertainty going on right now," Yung told the gaming commission. Various corporate functions, such as payroll, accounting and casino purchasing, will be handled out of Columbia Sussex's corporate headquarters in Fort Mitchell, Ky.
Once the deal closes, Columbia Sussex will operate 12 casinos in Nevada, Louisiana, Mississippi, Illinois, Indiana and New Jersey. The company's New Orleans riverboat was destroyed a year ago by Hurricane Katrina and is being moved to a neighboring city.
Because Columbia Sussex will publicly finance portions of the expected $3 billion in debt it will take on as part of the transaction, the company will be required to file quarterly reports with Securities and Exchange and Commission.
In Nevada, Columbia Sussex now operates The Westin in Las Vegas, River Palms in Laughlin and two casinos in South Lake Tahoe, Horizon and MontBleu. The company will acquire the Ramada Express in Laughlin as part of the Aztar purchase. Columbia Sussex also operates about 82 nongaming hotels under different brands.
Columbia Sussex executives outlined a $2 billion redevelopment plan for the Tropicana that conceptually would give the site more than 8,000 hotel rooms and an additional hotel brand. The Tropicana's casino and other public amenities would be rebuilt in phases, keeping the resort open and workers employed during the estimated two years of construction.
"These are ambitious plans and it's an ambitious deal, but with your track record and your ability, you should be able to pull off these type of things," Gaming Commission Chairman Pete Bernhard said.
Yung said overall design and construction plans are still being developed for the Tropicana site, but he hopes the company will be able to begin the project by the fall of 2007.
In the meantime, the company plans on operating the 1,880-room Tropicana and its 61,000-square-foot casino.
Columbia Sussex General Counsel Donna More said the company wanted to have its regulatory approvals in place before talking with workers. Nevada's OK joins previous approvals from New Jersey and Indiana. Louisiana regulators are expected to sign off on the financing next week, More said.
During Thursday's hearing, Gaming Commissioner Art Marshall questioned Columbia Sussex executives about having experienced casino operators in place at the Tropicana.
"My concern is the public face of the property," Marshall said. "Who are the people who will be running the properties?"
Columbia Sussex Chief Financial Officer Richard Fitzpatrick listed the names of several general managers for the company's casinos, each of whom had between one and two decades of gaming experience.
Yung said Larry Johnson, who has been general manager of the company's River Palms casino in Laughlin, would move to Las Vegas and take over the Tropicana.
"I think as far as the management and operations go, there won't be much difference the first couple of years," Yung said. "It's going to be a mess with all the construction."
The overall purchase price Columbia Sussex will pay for Aztar will rise slightly because of the timing of the expected closing.
Columbia Sussex is paying $54 a share for Aztar in an all-cash deal, as well as an assumption of the company's $676 million in debt and conversion of the company's bonds.
The purchase agreement calls for the transaction to close by Sunday, or else the price per share will increase less than a penny per share a day until the deal is final.
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