One of Donald Trump's larger units (but not the biggest), Trump Hotels & Casino Resorts has reached an agreement with some of its bondholders to file for Chapter 11 protection next month, allowing a restructuring which would reduce bond interest rates, bring in $400m of new capital, and reduce Trump's own holding from 54% to about 25%.
Trump himself would remain Chairman but hand over as CEO, probably to Scott C. Butera, executive vice president. The cash injection would come from DLJ Merchant Banking Partners, the private equity arm of Credit Suisse First Boston, the company's lead banker and would allow refurbishment of Trump's Atlantic City properties which have lost business to new rival Borgata Hotel Casino & Spa, a joint venture of Boyd Gaming Corp. and MGM Mirage. Representatives of the fund will sit on the board and supervise management.
However, many bondholders are unhappy with the downgrading of their debt and the lower interest coupon. Securities lawyers say they would have a good chance of having the deal blocked by a court, but of course they run the risk of precipitating a more serious collapse.
In the last year, Donald Trump has reaped new fame through a hit reality-TV show The Apprentice in which he dismisses young managers who fail a series of tests. His trademark line, “You're fired!” has acquired new resonance this week.
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