The purge of Atlantic City's weakest casinos continued Tuesday, as Trump Entertainment Resorts Inc. filed for bankruptcy in Delaware, a week before it plans to shut down Trump Plaza.
The company also said it expects to pull the plug on Taj Mahal in November if it fails to get concessions from the casino's unionized workers.
The Taj Mahal, which employs 2,963, would be the fifth Atlantic City casino to close this year.
Despite the threat of closure, Bob McDevitt, president of Unite Here Local 54, said there was little the union could do to help bail out Trump Taj Mahal.
"If our members were to work for minimum wage with no benefits, it wouldn't be enough to keep this property in the hands of its current owners for a year," he said.
"Trump's management team has tried desperately for years to stave off the inevitable takeover by the lenders," McDevitt said.
According to court documents, Trump Entertainment's primary lenders are affiliates of activist investor Carl Icahn, who last year blocked the sale of Trump Plaza for $20 million because he thought the price was too low.
Trump Entertainment has $285.6 million in first-lien debt held by Icahn affiliates. Annual debt service totals $38 million - far more than the money-losing Trump casinos can pay. Icahn also owns Tropicana Casino & Resort Atlantic City, which has been profitable this year.
During a previous Trump Entertainment bankruptcy, in 2009 and 2010, Icahn lost a fight for control of the company to hedge-fund manager Marc Lasry, whose Avenue Capital Group bought the properties out of bankruptcy for $225 million.
Avenue Capital, which is based in New York and specializes in buying distressed securities and loans, owned 21.7 percent of Trump Entertainment's stock when the company emerged from bankruptcy in 2010. Avenue has three representatives on Trump's eight-member board.
Public filings by former shareholders, including Putnam High Yield Trust, a bond mutual fund that obtained shares in the 2010 bankruptcy, show that those shares fell in value from $16 each in November 2010 to $2 each three years later.
Putnam's latest filings show no Trump holdings, but other funds' filings show that the privately traded shares were considered worthless as early as July 2013.
After the previous bankruptcy, Trump Entertainment attempted to retool its operations, but those efforts failed to increase revenue and profits, Robert Griffin, the company's chief executive, said Tuesday in a court filing.
Operating losses at Trump Entertainment, which also owns Trump Taj Mahal, soared from $5.1 million last year to $17.8 million in the first six months of this year alone, excluding an unusual expense of $7.8 million.
That put the company in a major cash crunch.
Griffin disclosed in bankruptcy documents Tuesday that Trump Entertainment missed a quarterly property-tax payment of $10.8 million that was due Aug. 28 and that it did not expect to have the cash to make a $9.5 million interest payment due Sept. 30 to Icahn.
Joe Weinert, of Spectrum Gaming, a consulting firm in Linwood, N.J., said that the bankruptcy could be taken in stride but that the talk of closing Taj Mahal was unexpected.
"To hear that it might close before it really has a chance to hit the reset button, both within its corporate structure and within the resized Atlantic City, comes as a bit of a surprise," Weinert said.
BY THE NUMBERS
Operating losses for
the first six months of this year at Trump Entertainment, owner of Trump Plaza and Trump Taj Mahal. This excludes an unusual expense of $7.8 million.
Missed quarterly property-tax payment that Trump Entertainment was to have paid by Aug. 28.
Trump Entertainment's first-lien debt
held by affiliates
of activist investor