11/04/2004

Trump Hotels Files for Chapter 11

On Thursday Trump hotels filed for chapter 11 bankruptcy protection, after reaching an agreement with bondholder to recapitalize debt. The plan will ease Trump's 1.8 billion dollar bond debt. the bankruptcy plan calls for 400 million dollars in debt reduction with an 8.5 % reduced interest rate. These measures should save the casino giant 98 million dollars a year in interest payments. Mr. Trump remains as chairman of the board and chief executive of THCR (Trump Hotel and Casino Resorts) Trump is expected to renovate and expand many of its existing properties, such as Trump Taj Mahal, Trump Plaza, and Trump Marina.

The debt restructure is in exchange for 74 million dollars in cash, 395 million dollars in common stock, and 1.25 billion dollars in new debt at the reduced interest rate of 8.5 percent. This restructuring seems like a fairly unfavorable use of chapter 11 bankruptcy. The reduction is debt is only 550 million dollars, with a fairly large increase in outstanding shares of common stock.

This report is after Donald Trump nearly was fired by his shareholders for consistent losses for all investing shareholders. The trouble that Trump is having also points to a lack of ability for Atlantic City casinos to be able to compete with the more family oriented Vegas gambling houses. Vegas' competitive advantage starts with more activities for all ages, including amusement parks, arcades, shopping and entertainment for families. Vegas' departure from adult only activities led Las Vegas into its largest economic boom in history.

Article found at: http://msnbc.msn.com/id/6305752/

14 comments:

John West said...

Trump doesn't care about the Taj Mahal or his other props in Atlantic City. His major holdings are his NYC real estate buildings. The Donald has become a big hit since the Apprentice began airing earlier this year. I think that he is arrogant and likeable at the same time.

Anonymous said...

If the Donald is so great why is he reporting losses all of the time. It seems to me that he has made some poor decisions. John West commented that Trump doesn't care much about Taj Mahal and other Atlantic City properties. Wouldn't it be smarter to sell off these undesirable companies and look to invest elsewhere? Maybe filing bankruptcy isn't the best answer, and selling off parts of the company that aren't performing would be better.

peter_parker said...

Donald needs to look into patenting Halloween wigs modeled after his orangatangish mop. They would be big and certainly revenues would ease his troubles.

Really though, he has some cash flow problems- not enough green to cover his bills. It's incredible that there are so many infant MBAs biting and scratching to follow this guy. I guess a six figure pay check makes kissing his feet a little more pleasant.

I think it would be wise to get out of the casino business and go somewhere else.

pramahaphil said...

You've been watching "Trump or Monkey?" on Lettreman, haven't you Peter Parker

Bryce Larkin said...

Everyone thinks Trump is a great businessman. In fact, this is not the first time that he has filed for chapter 11 on his businesses. TV can make anyone look good; I think this is an eye opening experience to not always believe what is on TV.

Bryce Larkin said...

I don't understand why Trump didn't build his great casinos in Las Vegas. Everyone knows Vegas for their hotels. What is up with Atlantic City?

Jake said...

I think that it may be time for Donald Trump to step aside as Chairman and let the shareholders bring in someone to help avoid future losses. He has proven himself as being successful, but change wouldn't be a bad idea and he would be able to bring in the money.

peter_parker said...

Yeah, "Trump or Monkey?" is a classic. How about "Secada or Cicada?". The best part is that people usually pick the monkey thinking its the Donald.

Bruce Banner said...

Trump is a monkey. I think now that Vegas is now steering away from "family" entertainment and now more focusing on the adult side again. Do you believe everything that the television tells you?

stevepadilla2 said...

I don't see how a guy with the world's sleeziest combeover can fool such a large portion of the public. Donald Trump is a spoiled unsuccesful air. I can't count how many times I have had to tell misled people that Donald Trump is not successful, and he is definately not one to be modeled as a business icon. For years Trump's shares have taken hits. Trump hotels and gaming is in the red in a booming industry with huge barriers of entry. He is out of touch with society and is engrossed with a false persona of success. Trump is the most classless wealthy person in the world.

Maudi said...

Donld Trump is a wizard when it comes to leveraging money. He might not be the most ethical person but, he knows how to use words like bankruptcy to scare banks into doing what he wants. Trump has rolled over time and time again on bankers and lending institutions in order to get the right business structure that he wants. Bankruptcy is more of a negotiation tool for Mr. Trump.

Dr. Tufte said...

-1 for spelling mistakes in Stevepadilla2's post.

Maudi has the best argument here - Trump recognizes that bankruptcy is one more negotiating tool to get what he wants.

Having said that, I think that Trump is more marketing than skill. Here's a guy that was born rich, and had all the benefits of that to put him into the position as an adult of ... being rich. Big deal.

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