Planned Bailout of Trump Casinos Falls Through
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Donald Trump (search) may have a new project for his apprentices — helping him try to figure out how to take his troubled casino company private after a proposed bailout fell through.
Trump Hotels & Casino Resorts Inc. (search) and investment banker DLJ Merchant Banking Partners (search), which announced the bailout plan last month as part of a prepackaged Trump Hotels bankruptcy, said late Wednesday they had terminated discussions "by mutual agreement."
In a prepared statement, the tycoon-turned-TV star said the company was pursuing restructuring proposals with its bondholders and that it "may pursue a potential privatization of the company."
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Neither Trump, who stars in the reality TV show "The Apprentice (search)," nor Trump Hotels Executive Vice President Scott Butera returned calls seeking comment Thursday.
DLJ, a private equity arm of Credit Suisse First Boston, declined to comment.
Trump has been searching for a way to save his cash-strapped casino company for months. The company, which operates three casinos in Atlantic City, has $1.8 billion in debt and is so overburdened with interest payments it has been unable to finance improvements or expansions to keep up with Atlantic City competitors.
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The situation has come under particular scrutiny because of Trump's larger-than-life role as the ultimate businessman in "The Apprentice." Every week, he fires a contestant for poor work performance and dispenses advice about how to succeed; the last remaining contestant wins an executive job at his company.
One analyst said it was unlikely Trump could raise the money to take the company private. Without a cash infusion, bankruptcy appears to be his only option, according to casino industry analyst Jane Pedreira of Lehman Brothers.
"He's in a tough spot right now," said Pedreira. "If he has to file, his name will be in the press for two years or however long it takes to get through bankruptcy."
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Under the proposed DLJ bailout, announced Aug. 9, Trump would have surrendered his majority stake and his title as CEO but left his name on the company and kept a 25 percent interest — as long as he made a required $55 million cash investment in the company.
But Trump needed bondholders to sign off on the restructuring, and they apparently were not ready to. Lisa Gonzalez, a spokeswoman for Chanin Capital Partners, which represents holders of Trump Casino Holdings bonds, declined to comment.