ATLANTIC CITY - Donald Trump, the celebrity CEO synonymous with Atlantic City's gaming industry since the 1980s, will continue to see his name light up the casino skyline.
A bankruptcy judge Monday ruled in favor of a group of Trump-backed corporate bondholders in a contentious fight with billionaire investor Carl Icahn for control of the Trump Entertainment Resorts Inc. gaming empire.
“I’m really happy about it. It’s a great victory,” Trump said in an interview with The Press of Atlantic City. “It’s a great victory for us and for Atlantic City because good things are going to happen.”
Trump’s celebrity daughter, Ivanka Trump, called it “a complete victory for all of us.”
The ruling by U.S. Bankruptcy Court Judge Judith H. Wizmur means that the Trump brand will stay on the casinos. Trump argued that only the bondholders would have the rights to his name if they prevailed in the fight for Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino. Icahn, who did not have a naming-rights deal with Trump, considered rebranding the casinos.
In her 121-page ruling, Wizmur concluded that the Trump name was worth millions of dollars to the company and that its continued use on the casinos helped to “tilt the balance” in favor of the bondholders over Icahn.
“The Trump Organization operates prominently worldwide. The (company’s) identification with the Trump Organization raises its profile in the gaming industry,” Wizmur wrote.
Icahn could not be reached for comment after the ruling was made public Monday evening.
Trump Entertainment bondholders will dominate the company’s ownership once it emerges from Chapter 11 bankruptcy protection. They have agreed to give Trump a stake of up to 10 percent in the reorganized company in exchange for the use of his name and image. They also plan to make Ivanka Trump a major part of their marketing campaign in hopes of attracting younger customers to the aging casinos.
Bondholders, led by New York-based Avenue Capital Group and its billionaire chairman, Marc Lasry, are buying the casinos for $225 million. They also plan to reduce the company’s crushing debt from nearly $1.8 billion to $335 million. Both Donald and Ivanka Trump said arrangements are already being made to reduce the debt even more.
“There’s a big difference between $1.8 billion in financing and a lot smaller amount of debt,” Trump said. “I think you’ll see more great things happening.”
Mark Juliano, chief executive officer of Trump Entertainment, said Wizmur’s ruling opens the door for new investment to help the casinos grow.
“The continued use of the Trump name along with $225 million in fresh equity in the company and a new capital structure couldn’t be a better scenario,” Juliano said.
“The employees are thrilled,” he added. “I think it was really important for the company and Atlantic City that we were able to do a transaction like this one. It really adds value and will continue the Trump legacy in Atlantic City.”
Trump’s name has loomed over the Atlantic City skyline since the opening of Trump Plaza in 1984. Trump added the Trump Marina, then known as Trump Castle, in 1985 and the Taj Mahal followed in 1990. Trump said he plans to look for new ways to market the casinos, including putting them in his NBC reality show, “The Celebrity Apprentice.”
Despite the glitzy Trump moniker, the casinos have struggled for years. This was the third time since the early 1990s that they have filed for Chapter 11 bankruptcy protection. Icahn had contended that the casinos would fall into bankruptcy a fourth time unless the court gave him ownership.
Although Icahn lost his bid to take over the casinos, he still has a role in the company’s future. He owns the $486 million mortgage on the casinos, meaning that the company will still have to deal with him as its chief lender. Icahn had wanted to convert the mortgage into ownership of the company and completely wipe out the debt.
Trump had some parting words for his nemesis.
“It’s too bad he had to take the approach he took, but it’s all worked out for the best,” he said of Icahn.
Icahn looked to add the Trump properties to his portfolio of casinos across the country. He owns the Tropicana Casino and Resort in Atlantic City as well as eight other casinos in Nevada, Mississippi, Louisiana and Indiana under the Tropicana Entertainment Inc. corporate umbrella. He formerly owned the now-defunct Sands Casino Hotel in Atlantic City.
Trump officials had argued that a takeover by Icahn would have given him too much power in Atlantic City and tripped the “undue economic concentration” provisions of New Jersey’s gaming regulations.
Trump Entertainment’s three properties make them second only to the four casinos owned by Harrah’s Entertainment Inc. in Atlantic City’s gaming hierarchy. However, the company plans to resurrect negotiations for the sale of weak sister Trump Marina to New York businessman and former Trump protege Richard T. Fields.
Fields and his gaming company, Coastal Marina LLC, originally proposed to buy Trump Marina in 2008 for $316 million. Fields had planned to rebrand it into a Margaritaville-themed casino in partnership with singer-songwriter Jimmy Buffett.
The price was later reduced to $270 million in hopes of salvaging the deal, but negotiations collapsed. With the weak economy sending the value of Atlantic City casinos plummeting, the proposed sale price has been slashed to just $75 million, with Fields first in line to buy it post-bankruptcy.
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