Trump looks to future
NEWARK, N.J. — Patrons of Donald J. Trump’s gambling halls probably won’t notice, but his casino empire is now in bankruptcy after months of negotiations with bondholders over a crushing $1.8 billion debt.
Trump Hotels & Casino Resorts Inc. — mainly consisting of three Atlantic City properties and a riverboat casino in Indiana — and related operations sought a Chapter 11 restructuring on Sunday after reaching agreement with most of its creditors on a new financial structure for the business.
Trump’s stake would be slashed to 27 percent from 47 percent, even after he plows $72 million into the new operation. Other common shareholders would be mostly wiped out, and bondholders would control about two-thirds of the equity in the reorganized company under the proposed restructuring plan, which is subject to court approval.
The bonds-for-equity swap would reduce annual interest costs by about $100 million a year. And Trump said the restructured company would now have the financial flexibility to add a new hotel tower to the Taj Mahal, his largest Atlantic City casino, and renovate the others.
Trump, who Forbes magazine in September ranked as the 74th-richest American with a net worth estimated at $2.6 billion, will stay on as chairman and CEO of the casino company. But the bondholders, led by several New York investment banks, will be able to appoint five board members, while Trump can name three. A ninth member would be chosen together.
The celebrity developer, who has made prime-time entertainment out of firing people on the reality show “The Apprentice,” denied Monday that the bankruptcy was a setback.
“I don’t think it’s a failure; it’s a success,” Trump said in a telephone interview. “In this case, it was just something that worked better than other alternatives. It’s really just a technical thing.”
The casino business is only a small part of Trump’s overall real estate empire. The business has been undermined by competitors who built new hotel towers, spruced up their casinos and lured gamblers away.
It is the second time Trump casinos filed for bankruptcy, but Trump insisted on Monday that this time the resorts will emerge from court-supervised reorganization with a lighter debt and enough credit to make improvements that observers believe are needed to keep pace with the competition.
“The future looks very good. We have one of the most powerful gaming companies the day it comes out” of bankruptcy, he said. “There’s no way we could have done that without the b-word.”
He said months of negotiations with bondholders over restructuring $1.8 billion in debt led to an agreement with nearly all of them that would cut the burden by $500 million through the equity swap.
The company would get an immediate $100 million bank loan, and will be able to draw on a $500 million credit line at 4 percent interest.
The casinos will continue to operate, and the company has court permission to keep paying its nearly 12,000 workers and contributing toward their benefits.