- The Washington Times - Tuesday, August 10, 2004

ATLANTIC CITY, N.J. (AP) — Donald Trump’s casino businesses, which have failed to share in his highly publicized successes in other realms in recent years, are being restructured under a bankruptcy protection plan that would strip the Donald of his majority stake.

Under the plan announced late Monday, Trump Hotels & Casino Resorts plans to enter Chapter 11 bankruptcy next month and emerge within a year.

DLJ Merchant Banking Partners, an arm of Credit Suisse First Boston, and Trump would invest $400 million to help the company pay down its $1.8 billion in debt and cut interest payments in half.

Mr. Trump, the chairman, chief executive and largest shareholder, would see his stake in the company shrink from 56 percent to 25 percent, with Credit Suisse owning more than two-thirds of the company.

Mr. Trump himself would contribute nearly $71 million, $55 million of which would be in the form of a co-investment with Credit Suisse and $15.9 million of which would come from his Trump Casino Holdings notes. Mr. Trump also would give up trademark rights to his name and likeness for use in connection with casino operations.

The plan has been endorsed by some Trump bondholders, but others still must agree to it.

“The reality is that it’s bitter medicine: You don’t want to take it, and it’s not pleasant at the time, but in the end, you get healthy,” said Frank Fantini, publisher of the Gaming Morning Report, a casino industry newsletter.

“In the end, that’s what’s happening here. If you’re a shareholder, you’ll own a smaller share but it’ll be a profitable company, which is better than owning a piece of a nonprofitable company,” Mr. Fantini said.

Trump Hotels stock was suspended from trading by the New York Stock Exchange yesterday. The company’s stock traded as high as $34 in 1996 before beginning a long slide to less than $2 a share on Monday.

Mr. Trump put a different spin on the deal.

“We’ve been working on it long and hard, and we’ve worked out a wonderful deal which will substantially reduce the debt of the company,” Mr. Trump said. He said the restructuring “reduced debt, lowered the [interest] rate and extended the term” of the debt.

He blamed problems in the gaming industry on “a lot of different things … including competition and fuel prices.”

As to the bankruptcy’s impact on his wealth, Mr. Trump said: “The casinos are less than 2 percent of my net worth, but it’s important to me because we’ve had this company for a long time. It has been good to me. That’s why I wanted to straighten out the structure of the company.”

Mr. Trump will remain chairman of the company but no longer be its chief executive or largest shareholder.

Trump Hotels Executive Vice President Scott Butera said in a conference call that Mr. Trump would have an “enormous” role in the company despite his concessions.

“We think this recapitalization comes at a great time for us, given the dynamic changes in the gaming industry. Upon successful completion of the plan, it will position the company to be one of the major players in the gaming industry,” Mr. Butera said.

Anthony Sabino, an associate professor of business at Peter J. Tobin College of Business at St. John’s University in Jamaica, N.Y., said the bankruptcy filing was “not surprising give the circumstances in the gaming industry.”

He noted that casinos in both Las Vegas and Atlantic City have been undercut by the growth of gaming operations on American Indian reservations and the weaker economy.

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