Trump unveils bankruptcy plan, will lose CEO titleAfter struggling for the last few years to pay $220 million in annual interest payments on $1.8 billion in debt, Donald Trump's Atlantic City-based casino operation, Trump Hotels & Casino Resorts, is heading to bankruptcy court.
In a plan announced in August, the company is expected to file for Chapter 11 bankruptcy, with plans to emerge with a revived company within a year. The plan calls for a $400 million bail out and restructured corporate control of the company.
The bailout will likely come from DLJ Merchant Banking Partners, a division of Credit Suisse First Boston. According to the Associated Press, Trump himself would contribute nearly $71 million, $55 million of which would be in the form of a co-investment with Credit Suisse, leaving $15.9 million from his Trump Casino Holdings notes.
Trump would relinquish his title as CEO of the company, but would remain on as chairman. Credit Suisse would own two-thirds of the company-Trump having seen his stake fall from 56 percent to 25 percent.
The "prepackaged" plan would shave $544 million in debt from the company's books and drop interest rates from 12 percent to under 8 percent on the remaining debt, cutting interest payments by more than $110 million annually.
"I get the sense that what he's trying to do is test the waters, see if anyone squawks, in putting out his planned proposal a month before he files," attorney and bankruptcy specialist Daniel Sklar told the AP. "It will probably end up being more of an opening offer than what the final plan looks like."
Trump had resisted moves in the past that sought to have his stake in the company lessened. But he seemed pleased with this plan.
"I'm really happy about it. Even though it's a small portion of my net worth, it's an important company to me," he said.
The bankruptcy will not affect plans for a $300 million hotel-condominium project Trump is planning with New Frontier owner Phil Ruffin on the Las Vegas Strip, a Trump spokeswoman said. It will be financed with Trump's personal holdings.