Doubts arise about Trump's net worth

He might lack funds to invest in his troubled casino company


As Donald J. Trump's casino company, Trump Hotels and Casino Resorts, sails headlong into a bankruptcy reorganization, Trump has to invest $55 million of his own money in the enterprise to maintain a large ownership stake.

But does he have it?

In an interview yesterday, as in many interviews before, Trump pegged his net worth at $4 billion to $5 billion, a figure that suggests he could easily chip $55 million into a paltry casino reorganization.

"It's cash I have on hand," Trump said. "I'm very, very liquid."

It is nearly impossible to independently determine how wealthy Trump is, because most of his assets are privately held real estate investments that lack the kind of unforgiving financial disclosure required of his publicly traded casino holdings.

But a cursory examination of Trump's finances suggests that his claims of being a billionaire might be greatly exaggerated.

Trump's casino holdings, as of about a week ago, were worth $34.5 million. That, however, was when Trump Hotels' stock was trading at about $2 a share on the New York Stock Exchange. As of yesterday, the stock traded over the counter for 36 cents a share.

Nevertheless, Trump repeatedly remarked yesterday that his Trump Hotels stock represented only about 2 percent of his wealth; based on the pre-bankruptcy trading price of the shares, that would give him a net worth of about $1.7 billion, far short of the $4 billion to $5 billion he claimed earlier in the day.

But even $1.7 billion might be an overly generous assessment of Trump's wealth.

Although Trump distances himself from his casino business, for most of his life in the public eye casinos represented a primary pillar of his wealth, with a substantial inheritance from his wealthy father and his real estate holdings making up the rest.

But past flirtations with personal bankruptcy forced Trump to either sell some prized real estate holdings or cede control of what remained to outside investors, particularly a group of wealthy Chinese financiers. Trump still owns some handsome properties, but his overall real estate holdings have been greatly diminished.

Did he borrow?

Two people with direct knowledge of the matter said that in the midst of his earlier financial crisis, Trump borrowed $20 million to $30 million from his father's $150 million estate to fend off creditors.

Trump disputed that yesterday, though he declined to provide a valuation of his father's estate. "I had zero borrowings from the estate," he said. "I give you my word."

In one well-publicized incident at the time, Trump's father walked into one of his Atlantic City casinos to buy chips to give his son's casinos some much needed cash.

"That was in 1990, OK?" Trump said yesterday. "That was a long time ago."

Moreover, although most multibillionaires do not serve as hucksters in commercials for Visa and Verizon, Trump said his ubiquity on television is not only shrewd self-promotion, but also was lucrative.

"I get a lot of money from doing that; it's not little money," he said. "Other rich people don't do commercials because no one asks them. It's just like The Apprentice. I can't tell you how many of my rich friends are dying, dying to have me put them on that show."

Loan offered

Credit Suisse Group, a Wall Street investment bank leading the bankruptcy reorganization of Trump Hotels, offered to lend Trump the $55 million he needs to partake of the ownership deal, according to an investment banker involved in the transaction.

But Trump said he planned to provide the money himself. If he does not come up with it, his equity stake in the company will largely evaporate.

"I'm not interested in a loan for this," Trump said. "I'm doing it out of cash. You can check on this after the deal is done."

The source of Trump's proposed $55 million investment has been an object of speculation among Trump Hotels bondholders and analysts. Jane Padreira, a fixed-income analyst who covers Trump Hotels for Lehman Brothers, was among several observers who think Trump will have to borrow the money.

"I don't believe that he has that kind of money," she said.

The reorganization of Trump Hotels makes financial sense. The company owns prime casino locations in a growth industry, and if the bankruptcy plan succeeds in reducing the company's debt burden, Trump Hotels will be able to finance an overhaul of its properties.

Whether Trump is along for the ride as an owner, rather than simply as a marketer, will be determined by that $55 million.

Even though the terms of the reorganization call for Trump to cede his chief executive post, Trump Hotels will pay him a $2 million salary to stay aboard as chairman and help promote the casinos.

"It's pretty amazing to still be paid with no executive capacity, after driving the company into bankruptcy," said Jeffrey A. Sonnenfeld, an associate dean at the Yale School of Management, a frequent critic of Trump. "It is surprising that the bondholders didn't say, `You're fired.' Instead, they said, `You are fired, but we are still paying you.'"

Not all of Trump Hotels bondholders have agreed to the bankruptcy reorganization plan, and that could derail the deal. In the meantime, Trump said, he intends to dip into his piggybank and remain in the casino game.

"One reason I have a lot of cash is because I'm in the condo business," Trump said. "I'm not bound to tell you how much cash I have, but I have a lot of cash and a lot of real estate."

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