News Room Administrators Staff
Trump Entertainment Resorts, Inc. (NASDAQ: TRMP) announced that it will delay making the $53.1 million bond interest payment due Dec. 1, as part of a strategy to maintain sufficient liquidity.
The company said it will now use a 30-day grace period for issuing the payment on its senior secured notes due 2015, which is due Monday. The forgo of the payment will provide the company with an extra time to negotiate with its lenders on ways to restructure its capital.
"During this period, the company and the Issuers intend to pursue discussions with their lenders to restructure the company's capital structure, improve liquidity, and create a platform to grow and diversify the company's business," Trump Entertainment said in a statement on Monday.
It added, "The company's Board of Directors has established a special committee comprised of independent directors to oversee these discussions."
The gaming industry in Atlantic City has been hit hard by the weak consumer spending, rising competition and financial crisis, forcing 11 casinos to post losses of $78.5 million in the third quarter. Revenue in the gaming sector has dropped by as much as 6.6 percent over the first 10 months this year.
The firm said, however, there can be no assurance that any agreement with respect to any restructuring will be reached or, if any agreement has been reached.
The aggregate principal amount of the senior notes is part of approximately $1.249 billion, which is the company's debt.
If the company fails to make the interest payment within the 30-day grace period then the holders of 25 percent of the outstanding principal of the bond will be permitted to accelerate the maturity of the notes.
The lenders for a $490 million Trump loan would also be able to accelerate payment of the debt, the statement said.
Trump Entertainment Resorts operates three casino resort properties: Trump Taj Mahal Casino Resort and Trump Plaza Hotel and Casino, located in Atlantic City, New Jersey, and Trump Marina Hotel Casino, located in Atlantic City's Marina District.
Donald Trump is a shareholder of the company and its non-executive chairman, who is not involved in the daily operations of the firm.
Shares of Trump Entertainment Resorts increased by 2 cents or 6.9 percent to 31 cents on Friday in late trading session on NASDAQ market. The stock of the firm has traded as low as 25 cents and as high as $5.70 over the last 52-week period.
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