Majestic Research

Daily News

Trump May Deal Casinos: Stock a Winner on Speculation of Possible Sale

Published: March 10, 2007

Donald Trump’s casino business has brought in Merrill Lynch to help it plot future moves, which could include a sale.

Trump Entertainment Resorts, which emerged from bankruptcy two years ago, is exploring a wide range of options, which may include refinancing or a partial sale. The development comes amid vigorous merger and acquisition activity in the casino industry.

Word of a possible sale sent the company’s stock up nearly 8% to $18.19, still below the 52-week high of $23.80.

The company owns Trump Plaza Hotel, Trump Taj Mahal and Trump Marina Hotel in Atlantic City plus a riverboat casino in Indiana.

Trump Resorts has faced competition from casinos in Connecticut, and will feel added pressure from gambling sites in New York and Pennsylvania.

“We continue to believe Trump will experience a tough 2007 and 2008 as the company is impacted by the new Pennsylvania slot parlors, Atlantic City smoking restrictions and its failed bid for a Philadelphia slot license,” Prudential Equity Group analyst Joel Simkins wrote to investors.

Buyout firms and other casino companies may be attracted to Trump because of its three Atlantic City properties and the cash flow generated by gambling, said Matt Jacob, a casino analyst at Majestic Research in New York. In the past year, Aztar, Station Casinos, Kerzner and Harrah’s have been taken private.

The company emerged from bankruptcy when it got a $500 million loan from Morgan Stanley and UBS. Trump remained chairman and chief executive with a 30% stake, according to the bankruptcy filing, though bondholders will have a controlling stake.

Trump’s office referred all calls to company spokesman Tom Hickey, who did not return calls.