Trump retains 30% of casino empire in Atlantic City

Bankruptcy court OKs plan to pare huge debt

April 06, 2005|By KNIGHT RIDDER/TRIBUNE

CHERRY HILL, N.J. - Donald J. Trump won bankruptcy court approval yesterday for a plan that lets him shed hundreds of millions of dollars in debt and gives him $500 million to upgrade his casinos in Atlantic City, N.J., and expand into other gambling markets.

The real estate developer and star of The Apprentice reality TV show will own 30 percent of Trump Entertainment Resorts Inc., the name of the reorganized company, while bondholders will own 65 percent.

Trump will remain chief executive officer and will chair a nine-member board of directors. Trump Entertainment, the entity replacing Trump Hotels & Casino Resorts Inc., is scheduled to emerge from bankruptcy within 30 days.

Under the agreement with bondholders, the company's debt was cut from $1.8 billion to $1.25 billion.

This was the second trip through bankruptcy for the company's three Atlantic City casinos, which employ about 7,600 and collectively have not turned a profit in almost a decade.

Trump reached agreement with a majority of bondholders on his reorganization plan before filing for Chapter 11 protection Nov. 21. Last week, shareholders dropped their push for a competing reorganization.

Under the plan, Trump can tap a $500 million line of credit from Morgan Stanley to renovate and expand his casinos.

Scott C. Butera, president and chief operating officer of Trump Entertainment, said adding a $300 million hotel tower to the Trump Taj Mahal, its flagship property in Atlantic City, was a priority.

"There's no question that the place needs to be reworked and refurbished," said shareholder Paul Westle, 68, of Elkins Park, Pa., who is a regular at the Taj Mahal. "When you have to pay such high interest on the bonds, you can never end up with enough cash in the company pocket to make improvements."

Butera said the refinancing will reduce the company's indebtedness by about $400 million, resulting from a reduced interest rate of 8.5 percent on new bonds. The lowered interest rate will result in annual interest savings of about $98 million, he said.

Attorney Frank A. Merola, who represented about 32,000 shareholders, said those who hold stock in Trump Hotels will receive $17.5 million in cash, warrants to buy stock in the new company and proceeds from the sale of the World's Fair casino site, currently an abandoned tract on the Boardwalk.

Trump's legendary, phoenix-like comebacks were not lost on slots player Geraldine Savidge Martin, 69, from West Deptford Township, N.J.

"He brings a lot of people in just by who he is," said Martin, as she shopped at the Taj Mahal last weekend. "He's always going bankrupt, and always opening something. He's a master at what he does."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.