Trump resigns from casino company
By DONALD WITTKOWSKI Staff Writer, 609-272-7258
Published: Saturday, February 14, 2009

ATLANTIC CITY - The casinos still carry his name, but Donald Trump is no longer the man in charge.
The celebrity casino mogul has resigned from the board of directors of his troubled gaming company in a dispute with creditors over a $1.25 billion debt-restructuring plan.

His stunning resignation, an-nounced in a statement Friday night, included bitter criticism of the bondholders of Trump Entertainment Resorts Inc. and the turmoil inside the company.

"Some time ago, I made an offer to buy the company in the hopes that I might be able to reverse its fortunes, but the bondholders turned me down," Trump said in the statement. "Now I will study and watch as the horrible and outrageous fees being paid to lawyers and consultants will suck the blood from the company."

Trump was the company's chairman and is the largest individual shareholder, owning about a quarter of the stock. His daughter, Ivanka Trump, joined him in resigning from Trump Entertainment's board. Trump indicated he wants to sell his shares, but the timing could be complicated by securities laws.

Trump's holdings in the casino company are separate from his ownership of the Trump Organization real estate empire. He stressed that his stake in Trump Entertainment represents "less than 1 percent of my net worth, and my investment in it is worthless to me now."
"While the Trump Organization grows and flourishes, Trump Entertainment Resorts, of which I am a stockholder, has languished," he said. "The Trump Organization's portfolio of residential, commercial, hotel and golf properties has expanded all over the world, while Trump Entertainment Resorts has yet to diversify outside of Atlantic City."

Like other casinos in town, Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino and Trump Marina Hotel Casino have been battered by the recession and competition from Pennsylvania slot parlors.

Trump Entertainment and its bondholders are renegotiating the company's suffocating debt to possibly avoid what would be the third trip through bankruptcy for the Trump casinos since the early 1990s. The deadline for reaching agreement is Tuesday.

Trump said the negotiations have turned into a volatile situation and it is better for him to leave now instead of staying with a company controlled by bondholders.

"During the past number of years, in exercising their oversight authority, the bondholders' representatives have made a series of bad decisions and encouraged wasteful spending, which has led to severe problems within the company," Trump said.

Trump, however, has contractual obligations to the company, including the use of his name on the casinos. He said he intends to honor those commitments.

"I will have certain ongoing contractual relationships with the company for a time, which I intend to abide by, and will monitor the situation and protect my rights as required," he said.

Mark Juliano, Trump Entertainment's chief executive officer, said the Trump name will remain on the casinos. Juliano noted Donald and Ivanka Trump have been the centerpiece of the company's promotional campaigns and corporate image.

"Obviously, the buildings and the company could lose quite a bit of cachet, and that goes for Ivanka as well," Juliano said of the Trumps' resignation. "So much of the company is built around the image of the Trumps, so we have to figure out how this all works out."

Trump's departure is expected to complicate negotiations with bondholders. Analysts say a prepackaged Chapter 11 bankruptcy agreed to beforehand by Trump's lenders may be the only way for the company to solve its financial crisis. In 2005, the Trump casinos shed hundreds of millions of dollars of debt and interest payments under a similar bankruptcy restructuring that cleaned up their balance sheet.

Trump's harsh criticism of bondholders gave the first behind-the-scenes glimpse of negotiations that have been held in secret for weeks. Talks to restructure Trump Entertainment's debt began after the company failed to make a $53.1 million interest payment Dec. 1.

"He just didn't feel he was getting anywhere with this group. He just had it," Juliano said of Trump and the bondholders. "I can only tell you right now that he made a significant offer that they were unable to accept. I guess he feels there's better use for his cash in all of the other deals available to him around the world."

Trump drew parallels between his company and the Tropicana Casino and Resort, which is under the control of a conservator after being stripped of its New Jersey gaming license in December 2007. Attempts to sell Tropicana in bankruptcy have been thwarted so far by a series of legal and financial difficulties.

"I have watched the collapse in enterprise value of the Atlantic City Tropicana, where bondholders' values have been reduced to almost nothing. I do not want to take part in a similar fiasco here," Trump said.

But Trump's statement also suggested that his resignation may not be permanent or that he could return to Atlantic City's casino scene in some other capacity. Analysts speculated that his resignation simply might be a bargaining tactic in talks with bondholders.

"I will give strong consideration to saving what was once a great casino hotel operation that bore my name," Trump said. "But unfortunately it is clear that I will have to work from the outside - the existing bondholder control will not permit a brighter future."

E-mail Donald Wittkowski:
DWittkowski@pressofac.com