| Donald Trump's casino settlement last week resolved his bitter dispute with bondholders over restructuring three Atlantic City casino-hotels. The settlement shows just how tough things are in Atlantic City amid a rocky economy and competition from slot machines in Pennsylvania, New York and Delaware. Gambling revenues in A.C. fell 13.5% for the first 10 months of 2009, to $3.4B. Four of the city's 11 casino-hotels look troubled, including two owned by Trump Entertainment Resorts (TRMPQ), and the situation could get worse says Barron's, if table games such as blackjack and craps are allowed in neighboring states' casinos. Trump bondholders effectively are putting in equity at about 7x projected 2009 cash flow. They are betting that 2009 is a trough year, and the company agrees, projecting $87M in 2010 cash flow. Other, however, see A.C. as poison. Investment firm Lazard tried and failed to being in outside investors to help recapitalize the Trump company earlier this year. However, despite the city's dangerous reputation, the upscale Borgata has been a success. And a group led by Morgan Stanley (MS) is going forward, perhaps unwisely, with construction of the $2B Revel casino-hotel. Other casinos holding their own include Harrah's Marina, Bally's and Caesars. Some think the four weakest properties-- Trump Marina, Trump Plaza, the Resorts casino-hotel and the Atlantic City Hilton-- may not be viable over the long haul. At least one notable bottom-fisher sees opportunity. Billionaire Carl Icahn is leading a group that has gained control of the bankrupt Tropicana. Reference Link :theflyonthewall.com |
