by Ray Poirier | Members of the financial department of Trump Entertainment Resorts Inc. (TRMP) are certainly becoming expert at talking with creditors, after all they have filed for bankruptcy on two previous occasions.
It hasn’t quite reached that point, yet, but the company announced on the weekend that it would not be able to meet a $53.1 million interest payment on its senior secured notes today. The company’s debt reportedly has reached $1.25 billion.
Standard & Poor’s Ratings Services responded to the move on Monday by cutting its Trump Entertainment debt rating to "D," signifying a default.
Current economic conditions that have hit Atlantic City casinos particularly hard have exacerbated the company’s financial problems. The company’s stock is down to the $0.30 level.
In a statement this weekend, the company said it would rely on a 30-day grace period during which a panel of independent directors will oversee talks with creditors.
For the third quarter, the company said it has incurred a loss of $139.1 million or $4.39 per share. This compared to the previous year when the company reported a profit of $6.6 million or $0.21 per share. Continuing operations produced a loss of $3.49 against a year earlier profit of $0.07. Revenue during the third quarter fell 8.4% to $198.3 million.
Causes for the decline, the company said, were slower consumer spending, competition from the new racinos in Pennsylvania and the partial smoking ban imposed by the city fathers. Also, not only had the number of customers decreased but the spending per person was lower, the company said.
Flamboyant real estate developer Donald Trump is the non-executive chairman and the largest single stockholder in the company that includes just three Atlantic City casinos. One of these, Trump Marina, reportedly is to be sold for $270 million to Richard Field’s Coastal Development LLC. Field also is the largest investor in Suffolk Downs racetrack in Massachusetts and a former Trump partner in a Florida development company that built Indian casinos.
A closing date for the Marina sale could be months away, it was reported.