11 August 2004
Donald Trump is used to the high life. He has high buildings, high hair and has always been unashamed of his high ambitions. But today, the man who made himself synonomous with glitz, glamour and greenbacks has been bought uncharacteristically low.
A centrepiece of his sprawling property holdings, Trump Hotel & Casino Resorts, has come unstuck. Bereft of his usual swagger, the man who likes to be called 'The Donald' confirmed that the company is unable to cope with debt that has reached $1.8 billion and will be filing for bankruptcy before the end of this month.
To be sure, this is not quite a re-run of the financial calamities that beset Trump in the early 1990s when a similar debt crunch almost robbed him of his entire empire. His core property business, which currently has his name atop some of the most prestigious residential and hotel buildings in New York City, will be unaffected by the move.
Nonetheless, the bankruptcy filing represents a stunning comedown for Trump, who in April was engaged to be married for the third time. Bringing a little of the glitter and pizazz of Vegas to an otherwise rundown Atlantic City in New Jersey has been a long-term commitment. His casinos there include the Taj Mahal and Castle. And the timing is awkward because of a certain television series, soon to be aired in Britain by the BBC, called 'The Apprentice', that was last winter's unexected reality TV mega-hit in the US. Its whole premise was the unassailable success of Trump.
As the star of the weekly show, aired by NBC, Trump put a group of young aspiring professionals through the paces of trying to cope with the dog-eat-dog corporate world. He ended the series by hiring one of the contestants to run one of his subsidiary companies, but not before he had systematically fired each of the other participants. By the end of the series he had turned the words,'You're fired!', into a national catchphrase.
The restructuring deal now hammered out with the bank Credit Suisse First Boston, CSFB, should save the casino business from oblivion and allow it to resurface from bankruptcy next year with a reduced debt load and cash for capital improvements. But it comes at some personal cost for Trump. For now, he is the one being 'Fired!'
While Trump will be allowed to stay on as the company's chairman, his own financial holding in it will plummet from 56 per cent to 25 per cent and he will no longer be Chief Executive Officer. He must also sign over the rights to his name and his image to the newly restructured company in perpetuity, even though he will no longer exercise control.
The humiliation only worsened yesterday when the New York Stock Exchange noted the imminense of the bankruptcy filing and announced that Trump Hotels and Casino Resorts was no longer eligible to be listed on the exchange.
Trump, whose latest best-selling book, inspired by his success in the television world, is called 'How to Get Rich: big Deals from the Star of the Apprentice', has blamed the difficulties at his casinos on rising petrol prices, the chill of the Iraqi war and terrorism and on competition from a new, high-end competing resort in Atlantic city, The Borgata, which has successfull syphoned off many of his more high-rolling clients.
He tried meanwhile to put his best face on the set-back, praising CSFB for helping in the rescue. "I have had a wonderful relationship with CSFB, and I am proud to be able to partner with them," he said.