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/

4 comments:

Ernie 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.

pramahaphil said...

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

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.