Trump, Cordish may be talking buyout

October 09, 2007 5:59 AM
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Former Las Vegas and Atlantic City casino executive Dennis Gomes tried to buy Trump Entertainment Resorts Inc. (TMRP) for a reported $14 a share but failed, much to the chagrin of stockholders who saw the share-value plummet to the $5 level.

But, if Wall Street rumors are accurate, Gomes is back at it, only this time he has powerhouse real estate developer Cordish Co. of Baltimore, Md., as a partner. It has been quickly noted by investors that Cordish Co. owns "The Walk," a $110 million retail shopping project at the foot of the Atlantic City Expressway, just outside Trump Plaza Hotel and Casino, one of the three gambling properties operated by Trump Entertainment.

The buyout rumors immediately put investors in a buying mode, pushing the shares of TRMP up to $8.44 a share at the close of business on Friday.

Speaking for the company, Tom Hickey said Trump Entertainment Resorts would not comment on the sales talk reports because it doesn’t comment "on rumors." However, he said, "We have always and we always will fully evaluate any strategic alternatives that presents themselves."

Ryan Worst, who follows the company for Brean Murray, Carret & Co., wrote in a client note that the market has been underestimating the value of the Trump casinos, especially the Taj Mahal, where there is room to build three new hotel towers. Worst said the sale of that one property could pay off most of Trump’s debt.

Part of the problem, the company has had in selling the place, is the fact that it currently carries $1.5 billion in debt, even after a 2005 Chapter 11 reorganization. Also, Donald Trump reportedly places a higher value on the company than do more interested buyers.

The company has a $250 million market capitalization.

Gomes’ name entered the deal rumor because he has joined with the Cordish Co. in the latter’s bid for a $600 million casino development in Wyandotte County, Kansas.

Cordish’s relationship with Trump has not been a good one. Trump filed a lawsuit against Cordish alleging he was cut out of a Florida casino-development deal involving the Seminole Tribe of Florida. An Atlantic City deal could put an end to their disagreement.