Trump Entertainment Resorts, the United States-based casino group majority-owned by Donald Trump, filed for bankruptcy protection this week in the face of multi-billion dollar debts. The news must have sent shivers down the well-leveraged spines of one or two other gaming operators.
The petition for Chapter 11 bankruptcy protection said the firm, which has casino properties in Atlantic City, New Jersey, had debts of USD1.7 billion as of 31st December 2008.
Although Trump Entertainment Resorts has no Asian interests, it appears the whole thing began to unravel after the company missed a USD53 million interest payment in early December.
When something like that happens, it’s almost inevitable that a company’s debt rating will be downgraded by one of more of the ratings agency. This creates a vicious circle making it even harder to raise money on the open market. In the current credit climate that can be fatal.
Trump Entertainment Resorts had not been in the best of financial health since as far back as 2004. Its woes today must though be a timely warning. Small wonder then that one or two gaming operators with Macau interests have been working to pay off bank debt early or retire bonds. The last thing a Macau operator wants to hear from his or her bankers in the present financial situation is: “You’re Fired”.
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