Business Stories Go Tough on Trump

Tongue firmly lodged in cheek, the business press had a little fun at self-described Midas-like billionaire Donald Trump's declaration that his next high-profile casino makeover could take place in bankruptcy court.

The award for most sardonic lede goes to the hometown paper for the news, The Atlantic City Press: "The next time Donald Trump writes a book trumpeting his successes in the business world, he should pay special attention to Chapter 11."

Second place easily goes to the Associated Press for "You could call it Trump: The Art of the (Bankruptcy Restructuring) Debt," playing on the magnate's past book titles of "The Art of the Deal" and "The Art of the Comeback."

Trump Hotels & Casino Resorts Inc. announced this week a new Chapter 11 restructuring deal with DLJ Merchant Banking Partners III, an arm of Credit Suisse First Boston, to invest $350 million in the three ailing, debt-heavy Trump casinos in Atlantic City. The plan would chop interest payments in half from roughly $220 million to $110 million, freeing up cash to expand the casinos to compete with newer, ritzier competitors along the strip, as well as to ante up in the newly OK'ed Pennsylvania slot machine game.

In interviews for a variety of stories, Trump trumpeted the move as "wonderful," a "smart deal," even "an amazing, amazing deal" that's "positive for everybody" and will elicit "a cash flow that's going to be tremendous."

While some stories speculated on potential success, business reporters overall weren't buying the spin, pointing out instead where "the Donald" had been trumped -- now and over the years -- by a limp investment.

Under the restructuring deal, the stories read, Trump would step down as chief executive officer, remaining as only chairman. His stock ownership would scale down from 56 percent to 25 percent, even as he'd pump another $55 million of his own cash and $18 million in bonds in the outfit. He would relinquish trademark rights to his name and image for casino use roughly a decade before they were due to expire on their own.

And as the Newark Star-Ledger reported, a trumped-up press release doesn't make this a done deal.

Reporter Judy DeHaven highlighted a graph buried at the bottom of the release that some stories missed: "A second group of bondholders, the company acknowledged, had rejected the offer from Trump Hotels and Casino Resorts. And while the company hopes a bankruptcy court judge will take its side and force them to accept it, analysts and legal experts said that route is fraught with uncertainty and could result in a drawn-out battle."

Including an accompanying Q&A, DeHaven talked to an opposing bondholder who questioned the bankruptcy settlement, suggesting that, as she writes later, "the proceeding could get mired in court for a long time."

Bloomberg also emphasized bondholder skepticism, scoring the only time Trump acknowledges the challenge on the record with a rousing "Perhaps it could" be a problem.

The New York Times focused on the $55 million that Trump himself promised the deal, while claiming he won't need to borrow any more to write that check. Reporters Timothy L. O'Brien and Eric Dash attempted to pin down the businessman's net worth -- not easy considering most of it is tied to privately held real estate -- and pored through financial documents that suggest "his claims of being a billionaire may be greatly exaggerated."

With the casino stock trading this week for about 36 cents a share -- a 99 percent nose-dive from a $34 peak in June 1996 -- on Tuesday, Trump's holdings are worth about $1.7 billion, less than half of his $4 billion boasts. But even that lower figure belies the businessman's loans and property sales of the last decade, the story read.

Even Trump's optimism in Pennsylvania may be unwarranted, as John Sullivan, reporter for The Philadelphia Inquirer, underlined the already stiff competition for slot parlors.

This bankruptcy announcement was anything but unpredictable, according to these business stories. From the casinos' "worn carpets and Seventies rock stars," as described in a The (Bergen) Record story, to their never posting a profit, business reporters and analysts they quoted clearly saw reorganization in the future.

One Newsday article looked at another bankruptcy filing of the past, when Trump cut his ownership shares and pushed the Taj Mahal through Chapter 11 proceedings in 1990 after defaulting on a $47 million payment on junk bonds.

Finally, reporters could hardly ignore how the news would play out on "The Apprentice," the now-infamous reality show featuring Trump. He insists this will help school the contestants in the ways of bankruptcy, but Newsday reporter James Bernstein wrote, "The latest filing raised questions about Trump's credibility as host of 'The Apprentice.'"

Still, as the New York Times pointed out, Trump will pocket a $2 million salary to be chairman and promote the casinos -- ironically more money than he made last year as chairman and CEO, according to this Forbes piece.

"It is surprising that the bondholders didn't say, 'You're fired,'" the Times quoted one Trump critic as saying.

Apparently, industry observers opted for the tongue-in-cheek route as well.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism