Onex To Buy Bankrupt Tropicana

Onex Corp. plans to acquire the assets of Tropicana Las Vegas Resort and Casino, a bankrupt company which the Canadian private equity firm has been acquiring the debt of, later this year, subject to regulatory approval.

(Reuters) – Canadian private-equity firm Onex Corp (OCX.TO) reported a jump in quarterly profit on Wednesday, but said it still expects the recession to continue for the balance of 2009 despite “glimmers of optimism.”

Onex, which has investments in industries as diverse as electronics manufacturing, health care and cosmetics, earned C$169 million ($143.2 million), or C$1.38 a share, in the three months ended March 31. That was up from a profit of C$45 million, or 36 Canadian cents a share, a year earlier.

Overall revenue rose to C$6.47 billion from C$6.23 billion a year earlier, Onex said.

The company said its results “do not follow any specific trends” because of its buying and selling of businesses, the impact of foreign exchange rates and varying cycles at its operating companies.

During the quarter, the company sold its stake in Canadian movie-theater chain operator Cineplex Galaxy Income Fund (CGX_u.TO) for net proceeds of about C$175 million, it said.

“While 2009 will undoubtedly be a difficult time, we believe that our businesses are well positioned to endure this downturn and grow both organically and through consolidation of their industries,” chief executive Gerald Schwartz said in a statement.

The company also revealed that over the last several months, it has been accumulating the senior debt of distressed casino operator Tropicana Las Vegas Resort and Casino. It expects to be able to take control of the company later this year, subject to regulatory approvals.

Toronto-based Onex said despite recent rallies in global markets sparked by predictions that a recovery may come sooner than expected, “we still believe that the recession will continue throughout the balance of 2009.”

Onex’s direct investments include contract electronics maker Celestica Inc (CLS.TO).

The company released results after markets closed. During the day, its shares fell C$1.75 to close at C$20.75 on the Toronto Stock Exchange.

($1=$1.18 Canadian) (Reporting by Wojtek Dabrowski; editing by Janet Guttsman)