Lack of available credit has impacted most if not all the major gaming companies from Atlantic City to Nevada and the first to fall may be Trump Entertainment Resorts Inc. (TRMP).
The troubled owner of three A.C. casinos has been given through a forbearance agreement until Jan. 21 to restructure its debt. Failure probably will lead to bankruptcy. That would be the third bankruptcy since founder Donald Trump sought public investment in his three casinos – the Taj Mahal, Trump Plaza, both on the Atlantic City Boardwalk, and Trump Marina.
The latter property has been under a sales agreement with Richard Fields and his Coastal Development LLC but because of the trouble many companies have encountered finding lenders the sale may not go forward.
Trump Entertainment missed a $53.1 million bond interest payment in early December and called on a 30-day grace period to seek the cash. During the final week of December, Trump officials were able to negotiate the forbearance agreement.
As of Sept. 30, 2008, the company’s total debt was given at $1.72 billion.
Because of increasing competition from racinos in New York and Pennsylvania, plus the economic slowdown, Atlantic City casino revenue has been declining rapidly. For the first 11 months of 2008, revenue dropped 6.7%, the second consecutive year of declining revenues after 28 straight years of growth.
One analyst said he believed Trump Entertainment would offer bondholders a debt exchange, but failing that, the company would file for a prepackaged bankruptcy.
He noted that Trump "cannot cut expenses as fast as revenue is declining at its three casinos. And, the sale of the Trump Marina is not assured in an environment where financing is very difficult to obtain."
Because of the company’s previous bankruptcies, Donald Trump’s holding in the company has fallen to about 25%.Related Articles:
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