Donald Trump hates to appear the loser, at anything. It damages his reputation as a business superman. It may prevent him from getting a fourth wife. He could lose his TV series. Success is Trump's way in the front door and always has been.
One place where Trump has stumbled is his gaming and gambling business. He is not alone. Many casino companies, including MGM Grand (NYSE: MGM), have been hurt by too much debt, over-building and the recession.
Trump Entertainment Resorts (NASDAQ: TRMP) has already missed a $53 billion debt payment. According to the FT, "The group, which operates three properties in Atlantic City, is saddled with $1.7bn of debt, of which about $1.2bn is bond debt." The paper says that one of Trump's options is to take the company private and give creditors stock in the new business. In the midst of a credit crisis they may rather do that then get pennies on a dollar in Chapter 11.
Who gets screwed? Why the common shareholders, of course. Two years ago, Trump shares were above $23. Now they trade at 21 cents.
Trump may get out of this without it costing him a dime to restructure the debt. People who bought the stock, perhaps because his name was attached to the company, will get zilch.
Douglas A. McIntyre is an editor at 247wallst.com
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Reader Comments (Page 1 of 1)
12-19-2008 @ 1:33PM
BHarrison said...
FACT: For the most part, wealthy people get rich (and richer) by using "OPM" - Other People's Money, that is a basic concept and truism.
There is nothing wrong with this, it's a basic part of capitalism; however, along the way during the last decade, things became too distorted and exaggerated. It became a "massive 'wheeler-dealer' market" . . . people threw prudent caution and "common sense" aside; they would buy into almost anything.
Now in retrospect, the truth is shaking out with all of these failures. The "developers" of these projects have made TENS and HUNDREDS of MILLIONS of dollars for their parts, and they will "make out" in the "dissolution of these project (or not "lose a dime"); and the stock holders will suffer the losses.
Perhaps in the future some peope will learn to not be so gullible; and will require more "vested MONETARY interests" by these project developers. Any project that does not require the developers to have significant monetary investment and exposure has a high potential for failure via overexpansion, mismanagement, etc.
Many of these "overexpanded projects" are nothing more than a type of pyramid schemes. It was the progressive "lipping of condo units", by real estate speculators, with increasingly higher prices, driving the market higher and higher, that finally collapsed the market. There were no "real buyers" for many of these units . . . it was all a perpetuated illusion of relative values.
The expansion of the hotel casinos to the point that exceeded the customer base, merely ensured failure for the entire industry . . . and all of those gullible investors who wind up being the losers.
12-20-2008 @ 4:25PM
Jim G said...
If Mr. Trump can not understand that he has worthless paper ($$) empire that now and the future will not generate enough revenue to support,this includes the loss in the property(realestate) value of his empire.
The word to his servival is "CONSOLIDATION"