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Trump Entertainment’s market value has tumbled to $7.3 million from its peak at $842 million in August 2005. The company’s 8.5 percent notes due June 2015 traded at 14 cents on the dollar Feb. 13, according to Trace, the bond-pricing system of the Financial Industry Regulatory Authority.
Trump controls about 28 percent of Trump Entertainment’s stock, according to a March 21 regulatory filing. His daughter, Ivanka Trump, also quit the board last week.
“I strongly disagree with the bondholders’ decisions and actions,” Trump, 62, said on Feb. 14.
Holders of most of company’s $1.25 billion in notes and Beal Bank Nevada, which is owed $490 million, have agreed not to exercise default rights for interest or principal payments until 9 a.m. New York time today.
A deadline to make the $53 million payment, originally due Dec. 1, has been extended four times since an initial grace period ended on Dec. 31.
Trump Entertainment emerged from bankruptcy 3 1/2 years ago. Its predecessor, Trump Hotels & Casino Resorts Inc., sought court protection in November 2004. It had lost money for nine years because of high interest payments that Trump claimed prevented the company from refurbishing and expanding its casinos.
Trump Entertainment’s board met late yesterday to decide whether to file for bankruptcy, the Wall Street Journal reported.
This would be the third trip to bankruptcy court for Trump Entertainment’s three casinos. Trump quit the company’s board on Feb. 13, saying he disagreed with bondholders’ decisions. He said bondholders turned down an offer he made to purchase the company.
By Beth Jinks
Feb. 17 (Bloomberg) — Trump Entertainment Resorts Inc., facing a deadline to make a $53 million interest payment on its bonds, may file for Chapter 11 bankruptcy protection as soon as today, according to a person familiar with the matter.
The company may file early this week if it can’t reach agreement with bondholders, the person said on Feb. 14. Bondholders also may force the Atlantic City, New Jersey-based casino operator into bankruptcy, said the person, who declined to be named because the discussions were ongoing.
Excerpted from Bloomberg article – Feb. 17, by Beth Jinks –
Trump Entertainment, Facing Payment Due, May Seek Bankruptcy
The casino operator had assets of about $2.1 billion and total debts of about $1.74 billion on December 31, 2008, it said in its filing with the U.S. Bankruptcy Court for the District of New Jersey.
Nine affiliates of the casino operator including Trump Plaza Associates, Trump Plaza Associates, Trump Marina Associates and Trump Taj Mahal Associates simultaneously sought protection, according to the filing.
The company missed a $53.1 million bond interest payment due on December 1 as a sharp downturn in consumer spending hit casino revenues.
Donald Trump said on Friday that he had decided to resign from the board of the company due to disagreements with bondholders who wanted the casino group to file for bankruptcy.
(Reporting by Ajay Kamalakaran in Bangalore; editing by Simon Jessop)
Excerpted from Reuters article – Feb. 17, 09
“Trump Entertainment Resorts Inc, Donald Trump’s casino group, filed for Chapter 11 bankruptcy protection on Tuesday, court documents show”
Last Updated: 2/17/2009
FINRA-Bloomberg Active US Corporate Bond Indices
Investment Grade Lagging Movers – 02/17/09
High Yield Lagging Movers – 02/17/09
View High Yield Index Membership List
FINRA TRACE Corporate Bond Market Activity
(on opening page – halfway down in a table)
All Issues Investment Grade High Yield Convertibles
Total Issues Traded 4,363 3,232 877 254
Advances 1,974 1,538 310 126
Declines 1,915 1,348 454 113
Unchanged 156 84 61 11
52 Week High 123 112 7 4
52 Week Low 168 119 43 6
Dollar Volume * 16,275 9,973 4,510 1,792
* Par value in millions
** my note –
What I noticed because I had a question about the Trump story – is that the declines and advances in the chart are very, very close compared to the other times and that when I went to the pages of high-yield bonds, the charts on them are extremely volatile with drastic dips in value.
The question I had originally was why would the bondholders in the Trump casino group bonds find it more advantageous to pressure the corporation into bankruptcy rather than to allow either the purchase by Mr. Trump or a continued profitable relationship with the group. In trying to understand what their advantage would be, I found the FINRA Trace site mentioned in the Bloomberg article.
So, my questions now are –
1. Is there oversight of the manner in which these bondholders are doing business activities (surely it is not in the hands of FINRA)?
2. How many bonds are currently in default that are currently engaged in trading such as these charts express? How are these defaults being handled by bondholders? Are they contributing to the defaults, liquidity difficulties and bankruptcies of our corporations?
3. How are they regulated? And, are they part of Collateralized Debt Obligations (CDOs) that are putting pressure on the bondholders to resolve other liquidity issues?
– cricketdiane, 02-17-09
It is my opinion only that these bonds are at the crux of our financial crisis and if even a third of them demand bankruptcy of their corporate facilities indebted to them, then we have a serious problem that has not been addressed.
Time is not on our side, but I believe there are solutions we can access to help resolve what is happening in this part of our financial industry and the impacts it is having on our businesses’ sustainability.
– “Cricket” Diane C. Phillips, 02-17-09
Are the bondholders forcing bankruptcies of our corporations in order to get equity in the companies through bankruptcy restructuring and what do the FINRA bond charts express about the economic crisis we are about to face?
The Oversight Committee is currently conducting an investigation into the financial crisis and is interested in any information that may help further the investigation.
My Note –
Bondholders are not supposed to be able to maneuver a hostile takeover by use of the lines of influence which their bonds provide them. That would exceed their legal and appropriate use of extending credit through bonds to any company.
The use of their position as bondholders and using these bonds to force corporate governance, corporate choices about solvency or bankruptcy, strategic maneuvers to acquire equity and/or power in the corporate structure are wrong and if it isn’t illegal, it certainly should be because it allows these manipulations outside the sphere of regulated activities.
Bondholders are not shareholders. They are not part of the governing body of the corporate structure. They are not entitled a vote in decision-making and their influence in corporate bankruptcies as a choice for solvency should not be tolerated.
Their vested interest is operating outside the jurisdiction of and appropriate jurisprudence that governs all other financial / corporate filings and actions, including that of mergers, acquisitions and the like, when it is used to manipulate or maneuver for control, equity, and acquisition that is unfavorable to the corporate survival.
Doesn’t that amount to a hostile takeover for pennies on the dollar?
– cricketdiane, 02-17-09
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