Updated from 9:41 a.m. EDT
Trump Hotels & Casino Resorts
said Monday that it had begun its recapitalization plan, having filed for Chapter 11 bankruptcy protection on Sunday.
The filing, in the U.S. Bankruptcy Court for the District of New Jersey, was expected, after the casino and hotel operator announced last month that it had reached agreements with bondholders to restructure it debt. Under the restructuring plan, Donald J. Trump, who has become a fixture of prime-time television by mentoring business hopefuls on "The Apprentice," remains the chairman and chief executive of the company, but his equity stake will drop to 27% from 56%.
Trump's casino empire has struggled under the weight of $1.8 billion in debt and increased competition in Atlantic City from the Borgata, a joint venture of
Shares fell 1 cent, or 1.7%, to 57 cents.
This is the second trip through chapter 11 for Trump's Atlantic City casinos, which filed for bankruptcy protection in 1992.
As part of the plan, the company has arranged for a $100 million interim facility from Beal Bank.
The recapitalization is dilutive for current shareholders, but it could make the company competitive again. When it unveiled the plan last month, Trump Hotels & Casino Resorts said it would allow the company to refurbish and expand existing resorts and move into new markets.
Under the plan, holders of about $1.8 billion of notes would exchange them for about $74 million in cash, along with $1.25 billion of new 10-year notes and about $395 million worth of common stock. Trump will make a $55 million cash equity investment and convert $16. 4 million of debt he owns into common stock.
Through a complicated web of subsidiaries, which also filed for bankruptcy protection Sunday, Trump Hotels & Casino Resorts owns the Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino and the Trump Marina Hotel Casino in Atlantic City, as well as a riverboat casino in Gary, Ind. It also manages a Native American casino near Palm Springs, Calif.