The corporate bondholders of Trump Entertainment Resorts will not let Donald Trump’s planned company buyout go unchallenged.
As expected, the investors-who stand to lose $1.25 billion if Trump’s plan is approved in bankruptcy court-filed motions in August to stop Trump in his tracks.
They called his offer of $100 million to take three publicly traded Atlantic City casinos private “a brazen insider deal” with only two possible beneficiaries: Trump himself and his financial partner, Andy Beal.
Under the plan, Trump and Dallas-based Beal Bank of Nevada would co-own the casinos. The bank would postpone the due date of a $486 million loan for eight more years, from 2012 to 2020, taking the pressure off a company awash in debt. But under the plan, bondholders as well as shareholders would walk away empty-handed.
Bondholders have fired back with a proposed deal of their own, offering to invest $175 million in Trump Taj Mahal, Trump Plaza and Trump Marina. They said their plan includes “a significant amount of cash” for Beal Bank, as well as money to the noteholders and unsecured creditors.
The company that bears Trump’s name, meanwhile, has thrown its support behind the real estate mogul. CEO Mark Juliano said Trump Entertainment and its advisers “met with both groups on a number of occasions, and our decision was based on what we really felt was best for the company.”
For bondholders to stop Trump, they must persuade the court to terminate the company’s exclusive right to propose and seek approval of a reorganization plan.
If approved, the bondholders’ plan also would complete the sale of Trump Marina-the weakest performer among the three Atlantic City casino properties-for the cut-rate price of $75 million to Coastal Marina LLC, which plans
to re-brand the property as Margaritaville.