Trump casino business files for bankruptcy
Monday, November 22nd 2004, 8:38 am
News On 6
NEWARK, N.J. (AP) _ Donald J. Trump's casino empire has filed for bankruptcy protection after months of negotiations with bondholders over restructuring a crushing debt.
Trump Hotels & Casino Resorts Inc. and numerous related operations filed for protection from its creditors under Chapter 11 of the bankruptcy code on Sunday in U.S. Bankruptcy Court in Camden, N.J. The Trump casino business consists mainly of three Atlantic City properties and a riverboat casino in Indiana and are only a small part of Trump's overall real estate empire.
The filings come even as Trump, the celebrity developer and best-selling author, has returned to the spotlight with the television show ``The Apprentice,'' which turned ``You're fired'' into a national catch phrase.
In a telephone interview Monday, Trump said he will remain chairman and CEO of Trump Hotels & Casino Resorts, but his share would be reduced to 27 percent from 47 percent under a proposed restructuring plan reached with bondholders last month.
He would still be the largest single shareholder and would still be running the company, he said.
Trump denied the bankruptcy was a setback.
``I don't think it's a failure, it's a success,'' he said in the interview. ``In this case, it was just something that worked better than other alternatives. It's really just a technical thing, but it came together.''
``We have one of the most powerful gaming companies the day it comes out (of bankruptcy). There's no way we could have done that without the 'B' word,'' he said.
He said ``the future looks very good.''
The Trump casino operations have been fighting to survive amid debt that has hampered Trump's efforts to maintain and expand his Trump Marina, Trump Taj Mahal and Trump Plaza casinos in Atlantic City. The properties have been hurt badly by new competition from the Borgata Hotel Casino & Spa and other casinos.
The filings list debt of about $1.8 billion in debt, which Trump said would be cut by $500 million. The interest rate on the debt would be reduced to 8 percent, from 15 percent, under the bankruptcy reorganization plans, he said. The company would also be able to draw on a $500 million credit line at 4 percent interest, he said.
He declined to predict how long it will take for the company to emerge from bankruptcy.
``I thought about taking it private, but it wouldn't have given us the same power we have now,'' Trump said.
He said the restructured company would expand Trump Taj Mahal, his largest Atlantic City casino, and renovate the others.
Trump also noted the casinos are just part of his overall real estate empire. ``This represents less than 1 percent of my net worth, but it is still an important company to me,'' he said.
Jane Pedreira, an analyst of fixed income gaming bonds for Lehman Brothers, said the Trump casinos are competitive now, and should do better after bankruptcy reorganization.
``This is not a doomsday scenario. He just needs to shrink his debt,'' Pedreira said. ``When you have that much debt, you can't leverage up to affect any large-scale expansion.''
She said negotiations with bondholders apparently got nearly all to agree to changes in the bond agreements, but failed to get the 100 percent, which would have made for a swifter course through bankruptcy.
In addition to the three Atlantic City properties, Trump Hotels & Resorts owns a riverboat casino located in Gary, Ind., and manages Trump 29 Casino, a Native American owned facility in California.
Shares of Trump Hotels & Casino Resorts have been trading at about 50 cents in the fall. The price had been in the $2 range before an announcement in August that the company would seek bankruptcy restructuring in which Donald Trump would surrender much of his control.
It is the second time Trump casinos filed for bankruptcy court protection. In 1992, Trump Taj Mahal, Trump Castle and Trump Plaza ended up in Chapter 11, burdened by more than $1 billion in debt and hurt by the 1990-91 recession.
Trump later regained control of the casinos, but high interest payments ate away at the company's bottom line, making it impossible to finance capital improvements at a time when Atlantic City competitors were luring gamblers away.