Donald Trump Gains Control of Casinos
Donald J. Trump is hoping the third time will be the charm.
As it prepares to exit bankruptcy court for the third time, Trump Entertainment Resorts and its three Atlantic City casinos will be under the control of Mr. Trump and bondholders after a court ruling on Monday.
Mr. Trump joined with bondholders in a successful $225 million bid that beat out a rival offer by Carl C. Icahn, known for his aggressive corporate takeovers.
Much of the money for the bid was put up by Avenue Capital Management, a New York hedge fund. Mr. Trump will control 10 percent of the company and will have the option to increase his stake in the future.
Rather than cash, Mr. Trump offered the bondholders the use of his name on the three casinos.
"The Trump brand is worth millions of dollars to the debtors," the bankruptcy judge, Judith Wizmur, said in her ruling. "The debtors' identification with the Trump Organization raises its profile in the gaming industry."
Mr. Trump, who was forced to give up operational control in an earlier round in bankruptcy court, predicted the company would fare better than it has in the past.
"We're very happy, it's a great victory," he said in an interview. "Icahn wanted the name, but we made the deal with bondholders."
Unlike the two previous bankruptcy plans, the debt of the company will be reduced sharply, falling from nearly $2 billion to less than $500 million, according to Ivanka Trump, Mr. Trump's daughter and executive vice president of development and acquisitions at the Trump Organization.
"We're going to have a large influx of new capital and we're positioning ourselves for future growth," she said. "It's a great time to be a gaming company without much debt and a very healthy capital structure. Few gaming companies are currently in that position."
Mr. Icahn had teamed up with Beal Bank of Texas, buying a $486 million mortgage on the company, which he had hoped to convert into a stake in the company once it emerged from bankruptcy. Mr. Icahn did not return calls seeking comment.
The three properties - Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Trump Marina Hotel Casino - face a cloudy future. Atlantic City, as well as the gambling industry, has suffered in recent years, hit hard by the recession and changing consumer tastes. More than one-third of the city's 11 casinos have been in bankruptcy, and more gamblers have been going to rival gambling centers in Pennsylvania, New York and Connecticut.
The Trump Taj Mahal is one of Atlantic City's biggest hotels, with more than 2,000 rooms. Together with the Trump Plaza and Trump Marina Hotel Casino, the three properties account for about a fifth of gambling revenue in Atlantic City.
Source: New York Times
