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Trump Entertainment’s New Owners Plan to Sell Casino
July 14, 2010, 3:31 PM EDT
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July 14 (Bloomberg) -- Trump Entertainment Resorts Inc., the bankrupt Atlantic City casino company, is in talks to sell the Trump Marina Hotel Casino, according to the leading bondholder taking over the company.

Discussions are under way with interested buyers, Marc Lasry, chief executive officer of New York-based Avenue Capital Group, told the New Jersey Casino Control Commission today in Atlantic City. Lasry and Avenue Capital, which will own 22 percent of Trump Entertainment once it exits bankruptcy, gained interim licensing approval from the panel.

Billionaire Lasry, along with other bondholders and company founder Donald J. Trump, won control of Trump Entertainment in April when a bankruptcy judge ruled their bid was better for creditors than a competing offer by investor Carl Icahn. Today’s licensing and plan approvals will pave the way for Trump Entertainment’s three Atlantic City casinos to exit bankruptcy for a third time.

“The Marina needs, how do I say this nicely, it needs updating,” Lasry said. “It’s in a phenomenal location, but it’s a bit old, and it’s a bit dated.”

Trump Entertainment, which last emerged from bankruptcy in May 2005, owns the Trump Taj Mahal Resort, Trump Plaza Hotel & Casino and Trump Marina. The three properties also went through bankruptcy in the 1990s.

Gambling Slump

Coastal Marina LLC, controlled by Richard T. Fields, had agreed in 2008 to buy Trump Marina and turn it into a Margaritaville casino resort. Last year, Fields renegotiated the deal, which included settlement of an unrelated lawsuit, and then reached yet another plan with bondholders to buy the Marina before Trump switched sides and aligned with them.

Atlantic City gambling revenue fell 8.4 percent this year through June from a year ago, extending a record three-year decline for the New Jersey seaside resort, hit by the economic slowdown and competition from nearby states including Pennsylvania, New York and Delaware. Six of the city’s casinos wound up in bankruptcy or are restructuring debt, and development has stalled.

Trump Entertainment’s new owners plan to spend money updating Trump Plaza, and want to attract more families to Atlantic City in order to compete with new casinos closer to their homes in nearby states, Lasry said today during commission questioning.

Icahn’s Plan

“I believe over the course of the next five years a lot of value is going to be created,” Lasry said. He said he was “more positive about the economy six months ago” and now believes Atlantic City casinos will turn around in two to three years, longer than the one to two years he had earlier projected.

U.S. Bankruptcy Judge Judith H. Wizmur on April 12 sided with a group of bondholders owed $1.2 billion. Their proposal reduces Trump Entertainment’s debt by $1.4 billion, gives Trump as much as 10 percent of the company he once ran and allows continued use of his name. The bondholders also offered to invest $225 million in Trump Entertainment.

Under Icahn’s losing plan, $480 million in bank debt that he bought from Texas banker Andy Beal would have been fully repaid by converting it to equity, wiping out the bondholders. Under the bondholders’ winning proposal, their notes will be canceled and the bank loans will be reduced by at least $100 million after selling a stake in the company. The remainder will be converted to a new loan to be repaid by 2015.

Icahn Objection

Icahn and Beal filed a last-minute objection to Trump Entertainment’s plan to exit bankruptcy, claiming that the company has not yet negotiated a brand licensing agreement with Donald and Ivanka Trump. The company has also failed to give Icahn and Beal copies of a new credit agreement, the pair said in court papers filed July 12.

Judge Wizmur scheduled a July 15 hearing on the objection, the day Trump Entertainment expects to exit bankruptcy, according to court papers.

When the bondholder-sponsored reorganization plan was approved, the judge required that copies of the licensing and credit agreements be given to Icahn and Beal so they could have a chance to challenge them before Trump Entertainment exited bankruptcy.

The bankruptcy case is In re TCI 2 Holdings LLC, 09-13654, U.S. Bankruptcy Court, District of New Jersey (Camden).

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(http://www.businessweek.com/news/2010-07-14/trump-entertainment-s-new-owners-plan-to-sell-casino.html)