Amid 'Apprentice' success, Trump's casinos in trouble financially

Newsday ^ | 3-30-04 | Curran

[wardaddy]

March 30, 2004, 5:06 PM EST ATLANTIC CITY, N.J. -- While Donald Trump basks in the popularity of his runaway hit reality TV show, "The Apprentice," the auditors for his Atlantic City casinos are raising alarms over their real-life debt. Barring a bailout, Trump Hotels & Casino Resorts may not be able to continue as a "going concern," auditors for Ernst & Young LLP warned in a letter to the company's board of directors. The debt-laden company, which runs three Atlantic City casinos, is struggling under stiff competition, recurring operating losses and what had a working capital deficit as of Dec. 31, 2003, the auditors said. The letter was made public Tuesday as part of Trump's filing of the company's annual report. "The Company is working on various alternatives to improve the Company's financial resources ... Absent the successful completion of one of these alternatives, the Company's operating results will increasingly become uncertain. These conditions raise substantial doubt about the Company's ability to continue as a going concern," the auditors said.

[wardaddy]

The Donald has some really serious debt in Atlantic City. 11.25% notes due in 2006 sounds awful.

I bet he thinks he can renegotiate that debt, but he may lose control of the company.

Bet the stockholders who are down wonder what he means when he showboats about what a great businessman he is on the Apprentice Show. I believe the stock is down about 900% since the IPO.

[Welsh Rabbit]

Couldn't happen to a nicer jerk...

[johnfrink]

This whole show is nothing more than a weekly 1 hour infomercial for the Trump brand.

That being said, it's a great show--better than any of the other "reality" TV out there.

[Eva]

I saw the last show, where Trump took the teams to his casino and told them to come up with a promotional idea to get gamblers to part with their money. Well, the team that offered a chance to win 1000 risk free to the high stakes gambling group won. It never seemed to occur to Trump that people who were already in the high stakes part of the hotel would have spent their money without the free giveaway. They recruited gamblers that were checking in, right from the checkout line! Trump doesn't seem to be that smart, maybe just a lucky risk taker.

[gov_bean_ counter]

I stayed in one of his Atlantic City places about 9 years ago. An airport shuttle bus driver said he bought if from "The Family". It had also been a Playboy Club. The Casino part had been shut down. Not very impressive even way back then.

The whole city gave me the creeps.

[blackdog]

Again!!!????

The best man in my wedding, a drywall contractor bid his Taj-Mahal casino and was awarded the bid. He had to take out a second mortgage on his home, borrow five hundred thousand to get started and when the bill came due upon job completion, Trump filed bankruptcy and my friend lost his home, his marriage, his cars, his business, and never really recovered in many ways.

I ran into Trump once in McSorley's and told him what I thought of him. I was removed from the premises by his goons.

Despite the media love affair with the jerk, there is an army of people he's wronged quite badly who would love to do him harm.

"Art of the Deal" my a$$...........

[per loin]

If Trump came around looking for a job, first thing I'd tell him would be to get a hair cut.

[wardaddy]

He is self deprecating about his hair to be fair. But, yes I agree....he is a bit too much snake oil salesman for me

[DManA]

It takes a real genius to lose money running a casino.

[wardaddy]

He seems to be able to get usually sound bankers and institutional lenders like insurance and pension funds to loan him enough money where they can't afford to let him sink.

He had a couple of lightning strikes:

1) Born to a quite wealthy daddy who got him started and supposedly pledged everything to bail him out last go around.

2) Sweetheart deal from NYC on the Hyatt and Grand Central at the perfect time.

He overpaid for several properties it would now appear and issuing 10 year notes and 11.25% was dangerous in my view. I bet they were call notes/bonds but he lacked the financing or cash flow to retire them early and refinance and now he is looking a huge payback in 24 months which on an issue that size at that interest is scary.

[wardaddy]

Yes....his performance for his shareholders is bad enough.

If the property is so valuable and he has gone from low 30s to 2.71 a share in 8 years in a real estate firm it would appear to me that the stock should have hit book value by now.

Anyone?

[blackdog]

Especially when commercial paper is currently at 3% to 4%. It's almost like free money!!!!!!!!!

I'm not quite sure why corporations aren't doing more capital improvements and building new processes in manufacturing when money is so cheap?

Maybe they are waiting until it goes back up to 10% so they can get a refund on their worthless MBA's?

[wardaddy]

Overleverage.

The black dog of any real estate developer.

It's my living in a tiny way compared to Trump and I try to not go beyond 65% debt to appraisal value overall portfolio even though I have 100% financed some deals.

I bet Trump is over 100% and thinking cash flow would increase over the years to compensate.

[mombonn]

I looked up the synonym "smoke and mirrors". It said "Trump".

[blackdog]

Those 11.25% notes are as worthless as his soul. He has no intention of paying those at maturity. Why should he? Our prevailing culture in Washington and Wallstreet just means he will default, still fly around in his helicopters, show his mug on television with no sense of disgrace, and accept a fine from Elliot Spitzer, which he will pay with assets from the same stockholders Spitzer is supposed to be an advocate for.

It's a Broadstreet/Wallstreet act that's getting mighty old these days.

[laconic]

Trump is living proof of the axiom that if you owe the bank $100,000 the bank owns you; if you owe the bank $1 billion, you own the bank. A poorer man would have been bankrupt; the banks couldn't afford to let Trump go under. He did do one remarkably prescient deal; buying the Columbus Hotel on on what, 42nd Street at a very cheap rate when NYCity had hit rock bottom and turning it into a Hyatt just as Manhattan rebounded.

[ClintonBeGone]

Bet the stockholders who are down wonder what he means when he showboats about what a great businessman he is on the Apprentice Show.

I'm sure his bondholders appreciate the over 11% return.

[ClintonBeGone]

Couldn't happen to a nicer jerk...

Why is Donald Trump a jerk? Sounds like you have capitalist envy.

APPRENTICE PING

[lilylangtree]

All together freepers. One, two, three: "You're fired, The Donald."

[cyborg]

Trump is a jerk, but a money making jerk and CEOs of his caliber do not get there by being nicey nicey with everyone. I am always careful when dishing out hate for rich people. Sometimes envy can be a real itch one is tempted to scratch.