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By DONALD WITTKOWSKI

Staff Writer

ATLANTIC CITY — Donald Trump is giving up the fight to reclaim his casino empire.

Trump’s famous name will stay on the three Atlantic City casinos he once controlled, but corporate bondholders would be the new bosses under a deal that ends a high-stakes bankruptcy battle.

Trump and his daughter, Ivanka, have agreed to back the bondholders’ proposed buyout of Trump Entertainment Resorts Inc. and will drop all of their litigation in bankruptcy court.

“This prolonged and continued litigation and the associated cost to the estate would mean that whoever won under their plan would ultimately lose,” Trump said in a press release Tuesday. “It is in the company’s best interests for all parties to coalesce around the noteholders’ plan, and I urge them to do so.”

In an interview with The Press of Atlantic City, Trump added, “I believe everybody is very happy. It’s something that is very good for Atlantic City and the state of New Jersey.”

Bondholders now have the inside track to buy the casinos and pull them out of Chapter 11 bankruptcy protection, where they have been since last February. The bondholders’ plan still must be approved by the bankruptcy judge overseeing the case.

Under the deal, Trump will allow bondholders to continue to use his name on the casinos in exchange for common stock and warrants giving him a 10 percent stake in the reorganized company.

He will also have rights to use the Trump brand for casino projects outside New Jersey, except for five neighboring states. The states were not named in the press release, but Trump said they include Pennsylvania and Maryland.

Trump and bondholders, who own $1.25 billion of Trump Entertainment notes, had been vying for control of the casinos. Trump and an affiliate of Dallas-based Beal Bank had offered to buy the company for about $114 million and slash its debts from $1.7 billion to $486 million. Trump initially proposed paying bondholders nothing for their notes, but later offered them about $14 million in cash.

Angry with Trump’s proposal, bondholders originally countered with a $175 million buyout plan, then increased their bid to $225 million. At first, they also proposed selling Trump Marina Hotel Casino for $75 million to help finance their deal, but later said they might not unload the financially ailing property after all.

Trump stepped down as company chairman in February when bondholders rejected his offer then to buy them out and take the company private. He responded by teaming up with his daughter and Beal Bank to try to acquire the company in bankruptcy.

Now that a settlement has been reached, discovery proceedings in the bankruptcy dispute have been suspended until Nov. 25. A bankruptcy conference call between the parties is scheduled for that day, according to a court document.

“This is a significant step forward in the noteholders’ plan to recapitalize the company and facilitate its reorganization,” said Marc Lasry, chairman and chief executive officer of Avenue Capital Group, a member of the bondholder committee.

Lasry added the agreement will help ease the way for Trump Entertainment to emerge from Chapter 11, while giving Trump a minority share of the company and keeping his name on the casinos.

One Trump foe, an Ohio lawyer who represents former Trump Entertainment stockholders, said it appears “that The Donald threw in the towel and took what he could get.”

“The noteholders were very determined, and in this case, Donald was outmuscled,” attorney Gerald W. Berger said in an e-mail statement.

Trump declined to respond to Berger’s comments. Berger has filed suit on behalf of 17 former Trump shareholders who claim they are owed $4.1 million from the company’s previous bankruptcy reorganization, in 2005.

In the press release, Trump said he would have been willing to continue his fight for control of the casinos if not for costly and protracted litigation that could have crippled the company.

“I have always felt a tremendous responsibility to New Jersey, and especially Atlantic City,” he said. “Therefore, I am motivated to give the properties the best chance to succeed on a reorganized basis.”

Contact Donald Wittkowski:

609-272-7258

DWittkowski@pressofac.com

8 comments:

• Madison (74) posts 10:03 am

  You're right. I meant to say 'empty suit.' And he's gotten to where he is today by b/sing people into giving him money and then leaving them in B/R court to get pennies back on the dollar (if they're lucky.) He's also a law 'suit' magnet. Go to Google business section, type in his name, and see how many people are suing him for failed condo projects. The luster is off his name, for most folks.

• VoiceOfReason (0) posts 2:41 pm

  MADISON says; "The man is an empty suite, always has been." Donald didn't get as far and as wealthy as he has because he's a stupid man Madison. I assume that you mean "empty suit" ... not "empty suite". I sure would like to have some of The Donalds empty suits or suites!

• Madison (74) posts 11:36 am

  I would have been shocked if Trump had prevailed in BK court with his self serving proposal. Obviously, he knew he wouldn't and gave in. The man is an empty suite, always has been. I'm amazed that the financial community has bought his bull for so long. Good riddance.

• VoiceOfReason (0) posts 9:55 am

  It's always amazing to me how many people with no resources have all the answers to complex problems relative to Atlantic City's casino industry. Maybe Donald Trump should have hired some of these brilliant minds to address his problems? In case anyone has not noticed ... Trump is not the only property in town experiencing financial difficulties. There are other dynamics at work that are causing many of the problems in the gaming industry nationwide. It's called "product oversaturization" and it's not restricted to A.C. during these lean times. Lack of faith in our elected leaders in Washington, D.C. also contributes to the unwillingness of many of us who still have a job to give up our hard-earned money to the gaming industry ... and it's going to get worse as President Obama and his cronies continues in their attempt to turn our democracy into a socialist country under their 'share the wealth' policies.

• Humble1 (34) posts 9:36 am

  If history has taught us anything, we better not hold our breath on this deal. However, if and when all the hurdles have been crossed and the names are on the dotted line, then I wil believe.

• localreader (13) posts 9:17 am

  “I have always felt a tremendous responsibility to New Jersey, and especially Atlantic City,” said Trump regarding this news. Sure! He only cares about himself. What about the many people whose lives he ruined during bankruptcies. This guy is a scumbag. Most folks were hoping he'd be out of here for good. Now maybe they will sell the Marina to Coastal and they'll fix up the place. Trump and his group sure ruined that great property by sucking it dry and letting it become a slum.

• scorpio08401 (57) posts 7:46 am

  Maybe an apprentice should teach Mr. Trump how to run a casino? How many times have his properties filed for bankruptcy protection ?

• American_Gaming_Guru (242) posts 7:39 pm

  Too bad. I dont think AC will ever see "The Donald" again! I hope this plan really works out though. AC needs it to. These properties were once the pride of the city and hopefully one day will be again.

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