For Sale?
by Andy Holtmann
For Sale?
Donald Trump is considering shedding his Atlantic City casinos
One or all three of Donald Trump’s casino properties could be on the sales block, the Press of Atlantic City reported in March.
Trump Entertainment Resorts, the publicly operated division of Trump’s holdings that operates the Trump Marina, Trump Plaza and Trump Taj Mahal hotel-casinos in Atlantic City, has retained the Wall Street financial firm Merrill Lynch to assess whether it would be viable to sell the properties-either individually, or collectively as a division.
Considering the recent spate of private equity deals in the gaming industry and Trump’s debt load, that route could make the most sense in a sale, said Joel H. Simkins, a casino analyst for Prudential Equity Group, in a recent investors note. Though Pinnacle Entertainment, Ameristar Casinos and, to a lesser degree, Penn National Gaming, could also be viewed as potential suitors, Simkins said.
With the possibility of slot machines being approved at racetracks in northern New Jersey and new casino competition in Pennsylvania, it could be harder for Trump’s three Atlantic City properties to meet expectations. Trump was denied in its bid for a Pennsylvania gaming license to build a slot parlor in Philadelphia.
“We continue to believe Trump will experience a tough 2007 and 2008 as the company is impacted by the new Pennsylvania slot parlors, Atlantic City smoking restrictions and its failed bid for a Philadelphia slot license,” Simkins said. “Nevertheless, the company has assets and real estate that could be attractive to a buyer interested in Atlantic City.”
Pinnacle recently acquired the Sands Casino Hotel on Atlantic City’s Boardwalk and is planning a $1.5 billion megaresort at the site. Ameristar and Penn National do not have an Atlantic City presence, though Simkins said that Penn has viewed the Atlantic City market more cautiously.
Las Vegas casino icon Steve Wynn was rumored to be interested in partnering with Trump on an Atlantic City resort. More recently, Wynn and Trump discussed a potential deal where Wynn would acquire Trump Plaza and demolish it, building a $3 billion megaresort.
James B. Perry, Trump Entertainment Resorts’ president and CEO, declined to discuss any specific rumors or talk of a potential sale. “In general, the company has always been open to talking with banks about financial opportunities,” he told the Press.
Merrill Lynch will reportedly also look at the viability of refinancing the company. Trump restructured its finances through Chapter 11 bankruptcy in 2005, cutting debt by $400 million and allowing the company to invest in improvement projects, including an 800-room hotel tower that will open next year at the Taj Mahal. In the fourth quarter of 2006, however, the company still reported a net loss of $9.7 million, or 31 cents per share.
