Casino news source: Forbes - http://www.forbes.com
No Deal for Trump Casinos
By WAYNE PARRY 07.02.07, 11:09 AM ET
Donald Trump knows the art of the deal. But he won't be making one for his three New Jersey casinos.
The company that bears the flamboyant real estate mogul's name had been up for sale for several months. But Trump Entertainment Resorts announced Monday it is not likely to be sold, sending shares of the company plummeting nearly 17 percent.
The operator of three Atlantic City casinos said its board believed that none of the "indications of interest" met its expectations.
"Now we will continue as we have to focus on our strategic operating plan, which has produced strong results for us," said company spokesman Tom Hickey.
That plan stresses reducing costs and attracting more big-stake gamblers to the company's three casinos, rather than seeking more players.
The company is building a new 786-room hotel tower at the Trump Taj Mahal Casino Resort, its largest casino, which is due to open next summer.
Trump Entertainment was in talks with a group led by former Atlantic City casino executive Dennis Gomes and real estate developer Morris Bailey about a possible sale of the casinos.
Hickey said the Gomes group submitted a formal bid for the company, but would not discuss specifics, including why it was rejected. He would not say how many other interested parties there were.
New York-based fund manager Dune Capital Management LP, which is run by former Goldman Sachs & Co. executives, was also said to be a possible bidder.
Trump Entertainment said it is not currently holding talks with any of the parties that were considering offers, but added it will continue to explore options.
In addition to the Taj Mahal, the company operates the Trump Marina Hotel Casino and the Trump Plaza Hotel and Casino. All three were recently granted new five-year operating licenses by the New Jersey Casino Control Commission, which expressed skepticism about rosy financial projections the company made for the next three years.
Last week, the company laid off two executive vice presidents to cut costs and will not fill either position. Let go were Paul B. Keller, who oversaw design and construction, and Virginia McDowell, its chief information officer.
The moves followed the departure of former CEO James Perry, who was replaced by Mark Juliano.
Shares of Trump Entertainment Resorts fell $2.12, or nearly 17 percent, to $10.46 Monday. The stock closed at $12.58 on Friday.
The company, like all 11 Atlantic City casinos, has been hurt by competition from slots parlors in Pennsylvania and New York, as well as the implementation of a partial smoking ban in mid-April.
Trump will face further competition in coming years from two new large casinos nearby on the Boardwalk.
One, by the Morgan Stanley investment firm to be operated by Revel Entertainment, is planned for land near the Showboat Casino-Hotel.
The former Sands Casino Hotel is to be razed this fall to make way for another new casino to be built by Pinnacle Entertainment.
Also in the planning stages is a third smaller "boutique" casino to be built by Curtis Bashaw, the former chairman of New Jersey Casino Reinvestment Development Authority, and Wally Barr, the former chief executive officer of Caesar's Entertainment, on land near the Atlantic City Hilton Casino Resort. |
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