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Tuesday, February 17, 2009


He is known as a successful entrepreneur to the millions who watch him on the US version of The Apprentice but Donald Trump on Tuesday suffered the indignity of watching a company that bears his name file for bankruptcy protection.

Trump Entertainment Resorts, of which Donald Trump owns 28 per cent, filed for Chapter 11 protection at a court in New Jersey on Tuesday after bondholders who control the debt-laden casino operator rejected Donald Trump’s attempt to take the company private.
Donald Trump had resigned from the board at the end of last week.

The filing came as the group missed its last deadline on a $53m interest payment. It is not the first time the group has filed for Chapter 11: four years ago, an earlier incarnation of Trump Entertainment also sought bankruptcy protection from its creditors.

“The fixed-income community has been expecting a debt restructuring here for some time due to the woes of Atlantic City and the high leverage of the company’s capital structure,” Dennis Farrell, a debt analyst with Wachovia Capital Markets LLC in Charlotte, North Carolina, said today in a phone interview.

Bondholders “indicated they are preparing to file an involuntary petition” for Chapter 11, according to today’s court filing. Trump Entertainment has reported profit in just three quarters since emerging from bankruptcy in May 2005.

Purchase Offer

Donald Trump quit the company’s board on Feb. 13, saying he disagreed with bondholders’ decisions, including their rejection of a buyout offer he made.

Donald Trump, 62, is a real estate developer and stars in the television show “The Apprentice.” Trump controls 24 percent of Trump Entertainment’s stock, according to today’s filing. His daughter, Ivanka Trump, also quit the board last week.

Trump Entertainment
’s market value tumbled to $7.3 million through Feb. 13 from its peak at $842 million in August 2005. Donald Trump, Morgan Stanley, Franklin Mutual Advisors LLC, and Sam Chang are listed as Trump Entertainment’s biggest shareholders in today’s petition.

The company owns the Trump Taj Mahal Casino Resort, the Trump Plaza Hotel and Casino, and the Trump Marina Hotel Casino.

Bond Price

The company’s 8.5 percent notes due June 2015 traded at 11 cents on the dollar at 11:12 a.m. New York time, according to Trace, the bond-pricing system of the Financial Industry Regulatory Authority.

Trump Entertainment Chief Executive Officer Mark Juliano, Chief Financial Officer John Burke and spokesman Tom Hickey didn’t return phone messages left between Feb. 13 and today.

Trump Entertainment
is represented by Michael Walsh of Weil, Gotshal & Manges LLP, who represented bondholders in the company’s 2004 bankruptcy reorganization.

Trump Entertainment’s local counsel is Charles Stanziale, from McCarter & English LLP in Newark, New Jersey.

Trump Entertainment will ask the Federal court in Camden tomorrow to allow the company to continue paying utilities and salaries, Stanziale said today in a telephone interview.

Another hearing is set for Feb. 19 asking the court “to approve an agreement between the lenders and the company to continue to fund the company’s operations,” he said. “We’re not asking for additional monies; we’re just asking for the use of the monies that are already” available.


The 20 largest creditors without collateral backing their claims are owed about $1.32 billion, according to court papers. U.S. Bank National Association, as trustee for bondholders, is listed as the largest unsecured creditor with a claim of $1.31 billion.

Other unsecured creditors include Bovis Lend Lease Inc., with a claim of $7.47 million; Thermal Energy Limited 1, with a claim of $1.86 million; Hess Corp., with a claim of $1.36 million; and Casino Control Fund, with a claim of $1.15 million.

Gambling revenue in Atlantic City fell a record 7.6 percent in 2008, its second annual decline, amid the recession and slot- machine competition from Pennsylvania and New York.

The casino company said Dec. 1 it would skip its interest payment to conserve cash and hold talks with lenders on restructuring its finances. Holders of most of the company’s $1.25 billion in notes and Beal Bank Nevada, which is owed $490 million, agreed not to exercise default rights for interest or principal payments until 9 a.m. New York time today, a target they had extended four times.

In December 2007, the company received a $500 million loan from Beal Bank Nevada, a Las Vegas-based affiliate of Dallas- based Beal Bank.

Merrill Lynch & Co. was hired in 2007 to find a buyer for the company, without success.

Trump Entertainment emerged from bankruptcy 3 1/2 years ago. Its predecessor, Trump Hotels & Casino Resorts Inc., sought court protection in November 2004. It had lost money for nine years because of high interest payments that Trump claimed prevented the company from refurbishing and expanding its casinos. The three casino resorts also went through bankruptcy in the 1990s.

The case is In re TCI 2 Holdings LLC, 09-13654, U.S. Bankruptcy Court, District of New Jersey (Camden).

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