|By Suzette Parmley, The Philadelphia
InquirerMcClatchy-Tribune Regional News
February 18, 2009 --Trump Entertainment Resorts Inc., hamstrung by a difficult economic climate and growing regional competition, filed for bankruptcy protection yesterday.
The filing, made in U.S. Bankruptcy Court in Camden, had been expected for several weeks by gaming analysts due to the company's debt burden and strained cash flow.
It marks the third time that the casino company has filed for Chapter 11 bankruptcy protection. Before the company went public in June 1995, the Trump Taj Mahal filed for Chapter 11 in July 1991, as did the former Trump Castle and Trump Plaza casinos in 1992.
"We are focused on our goal of successfully restructuring our company to reduce our debt in order to strengthen our balance sheet during this difficult economic period," said Mark Juliano, Trump Entertainment chief executive. "This filing will result in no immediate change in our daily operations."
Trump Entertainment owns the Trump Taj Mahal, Trump Plaza and Trump Marina casino hotels in Atlantic City. Juliano said that gamblers at the three properties would not be affected by the filing.
The company missed a $53 million bond payment on Dec. 1 and the 30-day grace period expired, which triggered the forebearance agreement. It stipulated in part that the company would try to restructure $1.25 billion in debt.
Trump Entertainment got multiple extensions over the past month to keep talks going with its primary lender, Beal Bank of Nevada, and with bondholders to delay or prevent a bankruptcy filing. The talks ended late Monday.
The filing comes just days after Donald J. Trump and his daughter, Ivanka, resigned from the board of Trump Entertainment. Trump, who had been chairman, said his decision Friday to sever ties with the company was over his growing dissatisfaction with its bondholders, who control the company.
Trump said he would continue "to honor contractual obligations" under the services agreement with Trump Entertainment, such as the free use of his name on the Trump casinos.
For how long, Juliano said, remains to be seen.
"We have not gotten into that discussion with Mr. Trump yet," he said. "When, and if, we terminate the services agreement, a mechanism is triggered that reverts back to a royalty or licensing agreement in which we will pay Mr. Trump for using his name on the existing buildings."
Juliano said that such an arrangement would be good for 10 years after the services agreement is terminated but that the company also could choose to forego using the Trump name anytime after termination.
Trump shares closed at 12 cents on the Nasdaq yesterday, down 47.8 percent, or 11 cents.
Other casinos in Atlantic City also are fighting for their survival.
The New Jersey Casino Control Commission is scheduled today to consider a request by Column Financial, the lead lender for Resorts Atlantic City casino, to either foreclose on the property or have the owners surrender title to it. The casino has failed to make a mortgage payment since October.
And the state-appointed trustee and conservator, Gary Stein, will tell the board how he plans to sell the Tropicana casino in a bankruptcy- court auction.
Scott Rothbort, a finance professor at Seton Hall's Stillman School of Business and president of LakeView Asset Management L.L.C., said, "This is a business that relies heavily on debt and leverage, and given the state of the credit markets, a lot of these companies will not be able to continue with their expansion plans, and closure is imminent for a few of them."
Contact staff writer Suzette Parmley at 215-854-2594 or firstname.lastname@example.org.
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