The owners of the Sacramento Kings have surrendered controlling interest in their Las Vegas casino, in a deal that they say improves their finances considerably.

After months of negotiations, the Maloof family announced Tuesday that it has reached a "recapitalization" agreement with the Palms Casino's main creditors, investment firms TPG Capital and Leonard Green & Partners.

Co-owner George Maloof said the deal erases the Palms' debt but leaves the family, which built the trendy casino a decade ago, with less than 50 percent of the equity. That gives controlling interest to TPG and Green.

But Maloof, who enjoys a high profile in Las Vegas, said he will continue to run the Palms. He said "it's not disappointing at all" that controlling interest has passed to the creditors.

The deal could have significant implications for the Kings at a crucial time in the team's history. The Kings passed up an opportunity last month to move to Anaheim, agreeing to give Sacramento a last chance to build a new arena. City officials and the NBA expect the Maloofs to contribute to the project, but the amount remains to be seen.

A month ago, Maloof said "we are not going into this (project) with a big checkbook."

But with the Palms deal concluded, he said the family's finances have improved.

"We're definitely in a better position," said Maloof, who is the family's point man on arena issues.

He said the debt deal is "good for the property, it's good for the family." He referred to the arrangement with TPG and Green as "a partnership."

TPG and Green said in a joint statement that they're "excited to partner with the Maloof family on this world class asset and iconic brand." TPG officials declined to comment further, and officials with the Green firm couldn't be reached.

Owning the Palms and the Kings has given the family enormous cachet. The Palms quickly became the Vegas resort of choice for rock stars, athletes and assorted other celebrities.

Although the Kings and the Palms are separate businesses, it's been clear that the hotel's problems have affected the family's overall finances. The Palms took a double hit in the recession: Not only did business slow at the casino and hotel, but a separate condominium tower still sits about one-third empty.

Last year the family sold its New Mexico beer distributorship to raise cash for the Palms. Clark County, Nev., real estate records show that the casino reached a forbearance agreement with creditors last summer on a $400 million line of credit. That gave the family more time to repay the debt.

However, Bloomberg business news reported earlier this year that the Palms had breached its loan covenants. That set in motion lengthy negotiations with Green and TPG and raised the prospect that the creditors could grab controlling interest. Green and TPG had purchased a chunk of the debt sometime last year, according to Bloomberg.

Brian Gordon of Applied Analysis, a Las Vegas financial consulting firm, said several casinos have had to restructure their debts in the past year or so. Typically, the creditors wind up owning a stake in the casino, he said.

Gordon said the casino business is on the mend in Vegas but "we're still well below peak levels seen in 2005 and 2006."

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