Equity deal may advance Trump’s plan for Nevada

Thursday, Feb. 12, 2004 | 10:49 a.m.

SUN STAFF AND WIRE REPORTS

ATLANTIC CITY -- Donald Trump's Trump Hotels & Casino Resorts Inc. today said Credit Suisse First Boston's private-equity unit will make a $400 million investment in the owner of the Taj Mahal and other Atlantic City casinos to become the company's majority shareholder.

The infusion by Credit Suisse's DLJ Merchant Banking Partners III LP will help reduce the company's debt, Atlantic City-based Trump Hotels said in a statement. Donald Trump, who now controls 47 percent of the company, will remain as chairman and a "significant equity holder," the company said.

Trump Hotels, which would change its name to Trump International Corp., said Credit Suisse's stake is contingent upon restructuring approximately $1.8 billion in debt. About $1.3 billion of that debt comes due in 2006 as Trump Hotels faces increased competition in Atlantic City, where it owns three casinos. The company's interest payments have kept it from investing in its properties.

Trump Hotels' fourth-quarter loss widened to $40.9 million, or $1.37 a share, from $17.3 million, or 78 cents a year ago. Revenue fell 4.3 percent to $336.4 million. The company hasn't had an annual profit in seven years and this year struggled against the $1.1 billion Borgata casino, which is owned by Boyd Gaming Corp. and MGM MIRAGE.

Shares of Trump Hotels rose 13 cents to $2.49 at 11:54 a.m. in New York Stock Exchange composite trading today. They fell 17 percent last year. Trump's 11.25 percent notes maturing in 2006 last traded at about 77 cents on the dollar, compared with about 80 cents at the end of last month, according to traders and Citigroup Inc.

In June, Trump hired Scott Butera, previously a banker at UBS AG, to take charge of reducing the company's debt load. Butera said in a December interview he wanted to refinance the $1.3 billion in debt within a year, and would consider selling a casino to pare debt.

The company also owns a riverboat casino in Gary, Ind., and manages the Trump 29 casino for the Twenty Nine Palms Band of Luiseno Mission Indians in California.

The DLJ Merchant Banking fund is managed by Credit Suisse's head of leveraged buyouts, Thompson Dean.

DLJ manages $29 billion in leveraged buyouts and real estate investments, making it the world's biggest manager of private equity assets, ahead of the $24 billion managed by Kohlberg Kravis Roberts & Co. and the $21 billion managed by J.P. Morgan Chase & Co.

"This is a very significant event for our company," Trump said in a statement. "Credit Suisse is one of the finest banking institutions in the world and I am excited to partner with its leading private equity arm, DLJ Merchant Banking Partners. This potential relationship would greatly enhance our competitive position and afford us an opportunity to extend the Trump brand globally."

The deal could help speed up Trump's entrance into the Nevada gambling industry.

Butera today said entering the Nevada market is a high priority for the company.

He explained that the plan would help free up capital for Donald Trump to proceed with his Nevada plans. Trump appeared before Nevada gaming regulators earlier this month and received preliminary approval to purchase 10 percent of the stock of Riviera Holdings Corp., parent company of the Riviera hotel-casino.

"This is not the first time they've looked at Nevada and it's been a matter of when, how much, to what degree, whether it would be a partnership or a sole run," said Jeremy Aguero, a gaming analyst with Applied Analysis, Las Vegas.

"I think what you're seeing is the manifestation of an exceptionally long due diligence period," Aguero said. "The fact that they are looking to capital markets at this time is another indication to us that they are the real deal."

Aguero said he has not heard any specifics of Trump's plans, but he thinks "big things are in the works."