Plan to End Merv’s Casino Bankruptcy : Bondholders Back Revamp of Resorts Intl. Company

Resorts International Inc. announced today that its bondholders have approved a reorganization plan designed to take entertainer Merv Griffin’s casino company out of bankruptcy.

Resorts’ plan filed in December under Chapter 11 of the U.S. Bankruptcy Code would give bondholders 78% of the company, dropping Griffin’s ownership to 22%. Resorts, in turn, will exchange the $911 million in debt held by those bondholders for a reduced debt service.

The plan was amended in April to include the proposed sale of Resorts’ Paradise Island operations in the Bahamas, which Resorts officials estimated could fetch between $250 million and $300 million for the still-struggling company.

The bondholder approval represents one more step in Resorts’ efforts to reorganize its debt-heavy structure. The plan still must be confirmed Tuesday by U.S. Bankruptcy Court in Camden, N.J., and approved by the New Jersey Casino Control Commission, as well as the government of the Bahamas.

“Now that our bondholders have approved our plan, we are looking forward to obtaining the court’s approval,” Resorts President David Hanlon said in a news release. “Our reorganization should be complete by the end of the summer and we will focus all of our energy on making Resorts the finest resort, and the best investment, it can be.”

Bondholders have said the plan is the best way to get some return on their investments.

The plan gives senior secured bondholders $292.8 million in new notes and 2.5% of Griffin’s shares. Holders of Resorts’ highest-paying bonds, 16 5/8%, would receive 32.4% of the shares and $58.9 million in new bonds.

The remaining bondholders would get 43.1% of the company stock and $78.6 million in new notes.

The plan also sets aside a legal kitty of $5 million to pursue a possible “fraudulent conveyance” action against Donald Trump, who swapped Resorts to Griffin for the newly opened Taj Mahal Casino Resort next door on the Boardwalk.

Resorts had expected that the April 2 opening of the Taj Mahal would bring more customers to that end of the Boardwalk, but that has failed to occur. The casino continues its slide of declining gross gaming revenue.