April 13 (Bloomberg) -- Donald J. Trump and his partners won control of the bankrupt casino company Trump Entertainment Resorts Inc., when a judge ruled that their bid was better for creditors than a competing offer by investor Carl Icahn.
U.S. Bankruptcy Judge Judith H. Wizmur yesterday sided with a group of bondholders who are owed $1.2 billion. Their proposal would reduce Trump Entertainment’s debt by $1.4 billion and give the celebrity billionaire as much as 10 percent of the three-casino company he once ran.
“This is a great victory for Trump and for the bondholders and we’re very happy about it,” Donald Trump said yesterday in a phone interview. “It’s a great loss for Carl Icahn. I was surprised he attempted what he attempted but that’s OK. It’s fine.”
The ruling ends a 14-month battle for control of Trump Entertainment, which pitted billionaires Icahn and Trump against each other in a court in Camden, New Jersey, and paves the way for Trump Entertainment’s three Atlantic City casinos to exit bankruptcy a third time. Icahn didn’t respond to phone requests seeking comment.
The bondholders, also backed by billionaire Marc Lasry of Avenue Capital Group, offered to invest $225 million in Trump Entertainment. Under Icahn’s losing plan, $480 million in bank debt he bought from Texas banker Andy Beal would have been fully repaid by converting it to equity, wiping out the bondholders.
Support From Creditors
Wizmur, who presided over at least one of the previous bankruptcies in which Trump was involved, said she picked the bondholder plan in part because it won more support from creditors than the Icahn proposal.
Under the bondholder plan, the $480 million in bank loans will be reduced by at least $100 million and the remainder converted to a new loan.
Trump will also allow the company to continue to use his name. During the court battle for control, Trump vowed to prevent Icahn from using the name.
“Most significantly,” Wizmur said, the bondholder group “established at confirmation hearings that the Trump brand is worth millions of dollars to the debtors.”
Trump’s lawyers had argued in court the brand was worth millions of dollars to the casino company, an amount they could “quantify,” Ivanka Trump, head of development and acquisitions at Trump Organization, and Donald’s daughter, said yesterday in a phone interview. During his testimony, Donald Trump claimed his brand was worth more than $3 billion.
‘No Concrete Plan’
“Carl never had a deal on the brand, he had to be very cautious with what he said with regards to it,” Ivanka Trump said. Icahn was “at one point being dismissive, but also saying that he wanted it.”
She also said there’s also “no concrete plan” to sell the Trump Marina Hotel & Casino.
Coastal Marina, controlled by Richard T. Fields, had agreed in May 2008 to buy the property and turn it into a Margaritaville casino resort. Fields last year renegotiated the deal, which included settlement of an unrelated lawsuit, and then reached yet another plan with bondholders to buy the Marina before Trump switched sides and aligned with them.
The case is In re TCI 2 Holdings LLC, 09-13654, U.S. Bankruptcy Court, District of New Jersey (Camden).
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