Trump's Junk Game Is Coming Up Craps
Donald Trump is abandoning his bid to peddle $125 million in new junk bonds for his Taj Mahal casino--a big setback in his plan to shed his heart-stopping debt. The problem: very little market interest in buying the bonds. A person close to Trump says he's giving up because selling the deal "is like banging your head against the wall."
These bonds were offered three months ago to help raise enough cash to allow The Donald to buy back the 50% ownership in the Taj Mahal that he surrendered to creditors following the 1990 near collapse of his empire. The buyback would let him float a planned initial public offering of stock in the Taj and his two other Atlantic City casinos. The IPO proceeds, in turn, would help him pay $235 million in other debt he has personally guaranteed, which his SEC filings say is due in mid-1995.
Why hasn't the new junk sold? After all, the plush Taj, Atlantic City's largest casino, is doing pretty well. For one thing, casino debt and IPOs have been in the tank since interest rates started climbing five months ago. For another, there's the threat of competition from proposed gambling parlors in Philadelphia and elsewhere. Finally, the Taj offering is disturbingly like 1980s junk deals: The new bonds don't pay interest until 1999. Trump now must hope the market will improve so he can try another offer. The Trump Organization wouldn't comment.