ATLANTIC CITY - Billionaire banker and high-stakes poker player Andy Beal has split from former ally Donald Trump to make a bid for the three bankrupt Trump Entertainment Resorts Inc. casinos.
Under Beal's buyout proposal, an affiliate of his Dallas-based bank is offering to convert its $486 million mortgage on the casinos into equity.
Beal Bank disclosed its plan in a bankruptcy conference call Wednesday, immediately drawing objections from attorneys representing Trump Entertainment bondholders, who have offered to buy the casinos for $225 million.
Trump and Beal had been partners vying with a rival group of bondholders for control of the casinos. Trump and Beal Bank had offered $114 million in cash for the company. Trump, however, withdrew from that deal last week and instead agreed to back the bondholders in return for an ownership stake in the casinos.
The deal appeared to give bondholders the inside track to buy the company, but the process took an unexpected turn when Beal Bank countered with its own offer independent of Trump.
Now bondholders face opposition from another billionaire in their quest to buy the casinos. In addition to being a banker, Andy Beal is known as a fearless gambler who has won more money in a single day than any other poker player - $11.7 million at the Las Vegas Bellagio casino on May 13, 2004. Beal's exploits in big-stakes Texas Hold 'em games were chronicled in the Michael Craig book "The Professor, the banker and the Suicide King: Inside the Richest Poker Game of All Time."
Beal's mortgage on the Trump casinos makes his bank first in line among bankruptcy creditors. Beal attorney Thomas E. Lauria told U.S. Bankruptcy Court Judge Judith H. Wizmur that the bank's offer was superior to the bondholders' deal because it would leave the casinos debt-free once they emerge from Chapter 11. Lauria also said that bondholders and Trump Entertainment's unsecured creditors would be given rights to invest in the casinos.
Kristopher M. Hansen, attorney for the bondholders, argued that Beal's offer is nothing more than a delaying tactic designed to "squeeze" more money out of bondholders in buyout talks.
"This is a request to gain some leverage in settlement discussions, and it's not necessary," Hansen said on the conference call.
After listening to arguments, Wizmur gave both sides until Dec. 3 to try to negotiate a deal. Attorneys will appear before her that day to report of their progress.
"We don't think the parties are very far apart," Trump Entertainment attorney Michael Walsh told Wizmur of a possible settlement. "I think we're close enough that we ought to give the parties a reasonable opportunity to finalize this thing. We're so close, your honor."
Wizmur has also scheduled a series of hearings beginning Jan. 20 to pick the company's new buyer. Hansen asserted that Beal Bank's proposal could jeopardize that timetable, but Lauria said there would be no delays.
The company operates Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino and Trump Marina Hotel Casino. Bondholders have talked of the possibility of selling the underperforming Trump Marina to help finance their proposed buyout.
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