Real estate mogul and reality TV star Donald Trump announced yesterday that he no longer planned to regain control of the three Trump Atlantic City casinos, but said they would still bear his famous name.
Trump and his daughter, Ivanka, reached a settlement agreement with a group of creditors in the bankruptcy battle for control of Trump Entertainment Resorts Inc., which filed for bankruptcy protection Feb. 17. Trump resigned as chairman of the board, citing his dissatisfaction with the bondholders and the direction Trump Entertainment was going. Ivanka Trump also quit the board.
For months, the Trumps and the creditors have engaged in a game of one-upmanship.
Under the deal reached yesterday, the three casinos - Trump Taj Mahal, Trump Marina, and Trump Plaza - will continue to use the Trump name and the likenesses of Trump and his daughter in their marketing efforts.
The Trumps agreed to support the creditors' reorganization plan and immediately suspend all litigation against them and the ad hoc committee, as well as release the company's debtors from claims in excess of $100 million if the creditors' plan is confirmed in bankruptcy court.
Prior to this pact, Trump had withdrawn support from and terminated his financing commitment for the debtors, who presented a competing reorganization plan.
"I have always felt a tremendous responsibility to New Jersey, and especially to Atlantic City," he said in a statement. "Therefore, I am motivated to give the properties the best chance to succeed on a reorganized basis. Had circumstances not changed, I would have aggressively continued to pursue the debtors' plan with the objective of acquiring control of and revitalizing a company that I have not run for many years.
"However, the debtors' plan has become mired in highly expensive and distracting litigation that threatens the entire enterprise," he said. "It is in the company's best interests for all parties to coalesce around the noteholders' plan, and I urge them to do so."
In exchange, the creditors agreed that Trump will receive common stock and warrants for 10 percent of the company after it is reorganized. Trump also will be free to use his name for gaming ventures outside Atlantic City, except in five neighboring and potentially competing states.
Marc Lasry, chairman and chief executive of Avenue Capital Group, a member of the ad hoc committee, said he was pleased with the deal.
"This is a significant step forward in the noteholders' plan to recapitalize the company and facilitate its reorganization," Lasry said.
Today's deal was a major breakthrough. As recently as last month, both the creditors and Trump had sweetened their offer for the company at a hearing in Camden.
The bondholders increased their offer to $225 million from $175 million. Trump and his daughter increased their bid from $100 million to just under $114 million. The duo made the bid with Dallas-based Beal Bank.
At that time, U.S. Bankruptcy Judge Judith Wizmur had denied a request by Trump to throw out the noteholders' new offer and set a Jan. 20 hearing date on the matter.