Is a Chapter 11 bankruptcy filing by Trump Entertainment Resorts, which runs two Atlantic City casinos, in the cards?
As of June 30, the company’s subsidiary had more than $285 million in debt secured by the two Trump casino-hotels — Trump Plaza and Trump Taj Mahal — in Atlantic City, according to a recent filing with state regulators.
The subsidiary entered into a forbearance agreement with its main lender in late June, indicating it would have been unable to make a recent interest payment on the debt, Alex Bumazhny, a casino analyst at Fitch Ratings, said Thursday. And Trump Taj Mahal recently told regulators it plans to indefinitely defer payment of its property taxes.
“Between paying interest payments and property tax it looks like the company overall is having a cash-flow crunch, hence a potential bankruptcy filing,” Bumazhny said of Trump Entertainment Resorts.
Trump Taj Mahal indicated in a quarterly report released in August that a restructuring could be on the horizon.
The property said it would be hard-pressed to fund its operation without "significant revenue increases and improvements in its operating results."
“There can be no assurance that the company will achieve such revenue increases or that it will be successful in obtaining additional sources of liquidity,” it told the state Division of Gaming Enforcement.
But Bumazhny said that “just because you’re in bankruptcy doesn’t necessarily mean you’re going to close.”
“Taj Mahal seems to be still profitable and will benefit probably from Trump Plaza’s closure (in mid-September),” he said. “We still expect it to remain open.”
“It’s more a capital structure issue rather than an operational issue,” he said, adding that the company could emerge stronger after undergoing the Chapter 11 process.
“Typically you’ll shed some debt. You’ll also have the opportunity to cancel any contracts that aren’t profitable” and possibly renegotiate union contracts, he said.
Trump casinos have been, as Fitch Ratings noted in a report last year, "serial filers of bankruptcy." They've been the subject of four bankruptcy cases since 1991, the report says.
A spokesman for Trump Entertainment Resorts did not return telephone calls requesting comment.
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