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Trump's departure may kill casino sale
By Beth Jinks |
February 16, 2009, Monday
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DONALD Trump's resignation from debt-laden Trump Entertainment Resorts Inc may kill the US$270 million sale of the company's Trump Marina Hotel Casino.
The price of the sale includes the settlement of a lawsuit Trump Entertainment filed against the property's buyer, Richard T. Fields. The deal, inked in May for US$316 million and discounted in October, was viewed by some analysts as overpriced for the Atlantic City, New Jersey, property, which Fields' Coastal Marina LLC planned to refurbish into a Margaritaville casino resort.
Trump Entertainment's lawsuit alleged that Fields had done improper deals with the Seminole Tribe of Florida to develop two Hard Rock casinos. Donald Trump had earlier hired Fields to help the firm win development deals with the American Indian tribe.
Bondholders, who may push Trump Entertainment into involuntary bankruptcy this week, would be stuck with all three casinos in the declining Atlantic City market should Trump's unusually structured sale fall through. "I strongly disagree with the bondholders' decisions and actions," Trump said in a phone interview with Bloomberg News on Friday. "Part of the reason that these bondholders can't make a deal is they've lost so much money on other deals, they've lost so much money on this deal, and they're probably going to lose so much money on other deals, that they don't care."
The lawsuit has been placed on hold pending closure of the sale in May, and will be dropped with prejudice should the deal be completed as disclosed, regulatory filings show.
Fields may walk away from the deal because of Trump's departure from the company's board and the decline of Atlantic City gambling revenues, a person familiar with matter said.
Regulatory filings
Gambling revenue in the seaside resort city fell a record 7.6 percent in 2008, the second straight annual decline as the recession deterred some gamblers, and slot-machine competition from nearby states wooed others. Revenue fell 9.4 percent in January.
Trump Marina is a 27-story hotel with a casino, theater, nightclub, and spa on 14 acres in Atlantic City. Analysts including Fitch Ratings' Michael Paladino, and Gimme Credit LLC's Kimberly Noland have questioned the likelihood of the sale closing since the deal was first disclosed in May.
The lawsuit is referred to as "Power Plant Litigation" in Trump Entertainment regulatory filings, in reference to Power Plant Entertainment LLC, a collaboration between Coastal Marina and Cordish Co, which built Hard Rock casino hotels in Hollywood and Tampa, Florida with the Seminoles after Fields left Trump.
Trump Entertainment's TER Development is suing for fraud, breach of fiduciary duty, conspiracy, violation of the Florida Deceptive and Unfair Trade Practices Act and interference with prospective business relationship, according to company documents filed with the court.
The price of the sale includes the settlement of a lawsuit Trump Entertainment filed against the property's buyer, Richard T. Fields. The deal, inked in May for US$316 million and discounted in October, was viewed by some analysts as overpriced for the Atlantic City, New Jersey, property, which Fields' Coastal Marina LLC planned to refurbish into a Margaritaville casino resort.
Trump Entertainment's lawsuit alleged that Fields had done improper deals with the Seminole Tribe of Florida to develop two Hard Rock casinos. Donald Trump had earlier hired Fields to help the firm win development deals with the American Indian tribe.
Bondholders, who may push Trump Entertainment into involuntary bankruptcy this week, would be stuck with all three casinos in the declining Atlantic City market should Trump's unusually structured sale fall through. "I strongly disagree with the bondholders' decisions and actions," Trump said in a phone interview with Bloomberg News on Friday. "Part of the reason that these bondholders can't make a deal is they've lost so much money on other deals, they've lost so much money on this deal, and they're probably going to lose so much money on other deals, that they don't care."
The lawsuit has been placed on hold pending closure of the sale in May, and will be dropped with prejudice should the deal be completed as disclosed, regulatory filings show.
Fields may walk away from the deal because of Trump's departure from the company's board and the decline of Atlantic City gambling revenues, a person familiar with matter said.
Regulatory filings
Gambling revenue in the seaside resort city fell a record 7.6 percent in 2008, the second straight annual decline as the recession deterred some gamblers, and slot-machine competition from nearby states wooed others. Revenue fell 9.4 percent in January.
Trump Marina is a 27-story hotel with a casino, theater, nightclub, and spa on 14 acres in Atlantic City. Analysts including Fitch Ratings' Michael Paladino, and Gimme Credit LLC's Kimberly Noland have questioned the likelihood of the sale closing since the deal was first disclosed in May.
The lawsuit is referred to as "Power Plant Litigation" in Trump Entertainment regulatory filings, in reference to Power Plant Entertainment LLC, a collaboration between Coastal Marina and Cordish Co, which built Hard Rock casino hotels in Hollywood and Tampa, Florida with the Seminoles after Fields left Trump.
Trump Entertainment's TER Development is suing for fraud, breach of fiduciary duty, conspiracy, violation of the Florida Deceptive and Unfair Trade Practices Act and interference with prospective business relationship, according to company documents filed with the court.
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