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Arroway
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Posted: 2004-07-27 15:59

Interesting article in WSJ about reality TV today.  By Trump's math he should be getting $18M per episode of "The Apprentice". 

Friends stars got $1.5M and there are 6 of them, so he should get $9M.  But Friends is a half hour, his show is an hour so he should get $18M.  Then he states he is totally serious.

He can't really be serious, can he?  He's on the show for at best, 10 minutes an episode.  Plus, no one will buy reruns of The Apprentice for syndication, which is a big revenue stream for Friends.  According to the article, he got a raise from $50K per episode, to "6 figures" but not the 8 figures he wanted.


"I ran over some old lady one night at the county fair, and I did not get arrested because my dad's the mayor." Rodney Anonymous

Nonius
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Posted: 2004-07-27 16:00
hmmm, dunno.  but, he is rich and he is constantly hosing new hot babes.

Chiral is Tyler Durden

chiral3
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Posted: 2004-07-27 16:09
I don't know.  There is more product placement and marketing involved in Trump.  Also, the buck starts and stops with him.  He doesn't have to pay a bunch of whiney actors every episode.  That, and he doesn't have to rent space, ihe owns it all.....  I think it is a bottom line cost reduction thing...

Nonius is Satoshi Nakamoto. 物の哀れ

James
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Posted: 2004-07-27 17:16

all I can say is neither kr nor I will buy his bonds at any yield.

and as far as 'constantly hosing noew hot babes' is concerned, I think that is a function of their stupidity as opposed to his brilliance.

Anyone heard from Ivanna recently?


"Reality is that which, when you choose not to believe in it, doesn't go away." Phillip K. Dick

kr
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Posted: 2004-07-27 18:00

truatl 11 1/4s @ 88/89, up from low 80s this spring, so somebody's buying, but it ain't me either, no sir

But it really is a cliffhanger strategy to promote the 'You're Fired' phrase, when he actually paid his interest on the aformentioned bonds nearly a month late.  Maybe the CSFB deal has been held up by the big change of guard going on there, but he's the one getting the axe when that gets done.  

Besides this lack of management and dealmaking talent, he isn't attractive, charming, interesting... So the question is:  Why?  Especially, why TV?  My theory is that the public likes to watch a whale of an ego and the ridiculous self-confidence that comes with it.  Can't really figure out any other explanation.

anyhow, truatl's getting a little dull, I am really having a great time watching these DAL 7.9s of 09 coming in for a very hard landing... Curious if my Amtran 8/04s are actually going to pay principal or not (take a look at the ATAH equity price action)... now Trump Air, that would be a great idea, no?


my bank got pwnd

wolf0564


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Posted: 2004-08-10 15:01

and sure enough here it comes (today's ft)

Trump Hotels in voluntary bankruptcy
LOS ANGELES, Aug 9 (Reuters)
Published: August 10 2004 10:34 | Last updated: August 10 2004 10:34

Trump Hotels & Casino Resorts on Monday said key bond holders had agreed to take the company into voluntary bankruptcy and restructure its $1.8 billion in debt to get a $400 million capital infusion.

 

Donald Trump, the real estate developer and star of reality show “The Apprentice” appeared poised to use his trademark line “You’re fired!” on himself as chief executive and to cut his controlling stake to 25 percent if the deal with debt holders and a Credit Suisse First Boston equity fund goes through.

CSFB’s DLJ Merchant Banking Partners III will co-invest $400 million with Trump and take a majority stake.

Trump will remain chairman of the company, which owns four casinos, including the Taj Mahal in Atlantic City, and has been seeking for months to restructure its debt.

It has come close to defaulting on interest payments in the process, although that did not threaten the developer’s non-casino real estate projects, which are held separately.

A significant amount of casino bond holders had agreed to swap $1.8 billion in debt for $1.25 billion in new 10-year publicly traded debt and a mix of cash and stock in the new company.

The annual interest rate will fall to 7.875 percent from an average of approximately 12 percent, and the company said it would be able to secure up to $500 million in new financing.

Stockholders will have the right to buy new shares in a rights offering, which will leave shareholders other than Donald Trump with between 0.1 percent and 4 percent of the new company.

“The Company intends to effect the transactions in a Chapter 11 (bankruptcy) proceeding pursuant to a pre-negotiated plan of reorganization in order to implement the Recapitalization Plan in an efficient and timely manner,” the company said.

It aims to begin the filing by the end of September and end in the the first quarter of 2005.

Trump himself will invest $55 million in the new company with CSFB and $15.9 million in notes. He would also receive land in Atlantic City and his real estate firm would get the right of first offer to serve as contractor for new development.

The restructuring will cut the company’s annual cash interest expense by about $110.2 million.

 


kr
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Posted: 2004-08-11 15:26

the statistics, sirs:

Trump's Image Belies His Woeful Management Record: David Pauly

Aug. 11 (Bloomberg) -- In America, being on TV is everything. For proof, see builder Donald Trump.

His public record for management is horrible. Trump Hotels & Casino Resorts Inc., which operates three gambling spots in Atlantic City, New Jersey, has lost money in each of its eight years as a shareholder-owned company -- and has finally gone broke.

No matter. Donald Trump, who also runs privately owned real estate ventures, is a TV star. His career-long effort at self- aggrandizement -- publishing books and dating bimbos -- reached the peak this year with his role in ``The Apprentice.'' People actually watched week after week as several candidates competed for a job with a man who purportedly was a great manager.

All Trump, 58, can teach anybody about managing, if Trump Hotels is a guide, is this: Sell more bonds than you could ever possibly pay back, let the competition eat your lunch, live the good life as chief executive -- and then go bankrupt.

In a deal announced Monday, Trump Hotels bondholders agreed to wipe out about $544 million of the gambling company's debt of $1.8 billion. Shareholders already have been wiped out, unless you consider 36 cents a share, yesterday's closing price, the start of a nest egg.

New Money

As part of the deal, Credit Suisse First Boston, the investment banker, and possibly Trump himself will put $400 million of new cash into the gaming company. Of that, Trump can put in as much as $55 million, if he chooses. He also will give $15.9 billion in Trump Hotels bonds back to the company.

Trump's personal equity stake in the company would be reduced to about 25 percent from 56 percent, Scott Butera, Trump Hotels vice president, said, and Trump will be stripped of his CEO title.

He will continue as chairman, however, at a salary of $2 million a year, more than the $1.5 million he got in 2003. What's more -- this is the best part -- Trump Hotels gets ``a perpetual and exclusive worldwide trademark license, royalty free'' to use Trump's name and likeness to promote the casinos.

That's the power of television. Trump's value is entirely in his ridiculously coiffed image.

A Loser

His management record at Trump Hotels shows a cumulative loss of $443 million as a public company. Interest payments totaling $1.7 billion in those eight years left the company without sufficient funds for capital improvement that might have allowed its Atlantic City casinos to compete.

With bondholders agreeing to take their lumps, Trump Hotels said it would seek Chapter 11 bankruptcy proceedings next month. The prepackaged bankruptcy arrangement also extends the maturity of Trump Hotels debt and reduces the company's average interest rate to 7.9 percent from 12 percent.

Trump's mismanagement of his public company makes you wonder just how well, or poorly, he manages his privately held real estate businesses, which include condominiums in New York and a planned condominium building in Chicago.

Disclosure of any troubles there wouldn't hurt Trump. He's a celebrity, ranking with the bug-eaters, lewdsters and screamers who dominate TV. Total failure would only increase his stature.

 


my bank got pwnd

wolf0564


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Posted: 2004-08-11 15:37

The prepackaged bankruptcy arrangement also extends the maturity of Trump Hotels debt and reduces the company's average interest rate to 7.9 percent from 12 percent.

now how does that work - just like that ?


i'm in here for the vega

kr
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Posted: 2004-08-11 15:52
yep

'prepack' means that all this was prenegotiated over the last several months, and everybody agreed to the terms, then the Ch.11 is just a quickie, minimizes expenses. 

And the holders are taking less because the asset value is just not there - ultimately, it's just a DCF calc telling you that the debt's underwater, no sense clamoring for money that ain't there.  AC is crap, they cannot compete, period. 

As I was discussing with somebody over here, the one modelling trick worth noticing here - which is a general principal - is what I'd call 'CAPX reserve'.  In this biz, if you don't keep updating the furniture, pretty soon you're out of style and nobody will visit your casino.  But the timing's up to you, so if you're desperate, you can afford to put it off.  Temporarily.  However, the absense of upkeep-capital-expenditures is not an accrual on anybody's balance sheet, even though the accumulated shortfall is working against asset value every day you delay.  Now, conditional on default, P(CAPX reserve depleted to the maximal extent) = 99%.  This explains some of the firm asset value's sudden drop on default - basically, if you want to operate the assets, you will have to immediately stump up a big pile of cash for CAPX right out of the gate. 

Of course, that's not necessarily a bad thing - if you decide to liquidate, you know that most of the value's been fully amortized... looks more efficient from that point of view.  A big question in my mind, then, is when emergence from Ch. 11 means you are starting a brand-new company (i.e. when new capx required is a substantial fraction of the existing asset value).

my bank got pwnd

chiral3
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Posted: 2004-08-11 16:14
Just to answer tho original question, yes.  Yes he is a rich idiot.

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Martingale
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Posted: 2004-08-11 16:19
and the "saturday night live " hosted by him was the worst I've seen Big Smile

rowdyroddypiper
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Posted: 2004-08-13 02:01

Indeed, all your bond are belong to us. 

CAPEX is a goofy goofy thing.  It's also one of the levers that Trump was probably able to pull to prepack this thing and retain a decent stake in ownership/control. 

 "You want me, THE FUCKING DONALD, to turn over the reins and let you keep the upside?  How about I tie you up and we can see how much these Casinos are worth with 3 or 4 more years of deferred maintenance.  Did I mention I'm cutting my ad budget too?" 

I'm not sure but I'd imagine the Hotel/Gaming business is structured very similar to the straight hotel business.  Donald probably owns a company that is contracted to manage these hotels.  They probably do not own the hotels themselves.  The management company has no liability other than to manage the hotel/casino pursuant to the terms of the agreement.  The Donald could give a shit about the Real Estate, it's the management contract that brings home the bacon.  There's not really a huge market for dilapidated heading toward functionally obsolete hotels anyway. 

This structure for DT's company is all speculation.  I haven't even bothered looking into this, but I'd guess that the borrowing entity on the defaulted bonds exists for the sole purpose of mortgaging the underlying hotels.  No more, no less.  Quite honestly if these dumb fuckers want to jump into bed with a bad borrower at a rate that he has no incentive to prepay, well, that's why they get the big bucks.  Willingness is probably more important than ability to pay.  I think Donald is batting .000 on both those fronts.   

FWIW:  I think that these assets got prepacked in '93-'94 but I could be mistaken.  Anyone know if this is true and if it is has some enterprising young turk has capitalized on the chapter 22 nature of this latest deal?

 

 

 


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rowdyroddypiper
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Posted: 2004-08-13 02:14
Okay scratch that last post.  I just looked at some filings and it appears that his Management Co., Hotel Ownership, etc. are rolled up into one big happy family.  Peachy. 

We got all markets on lock from meat to stock

nsande


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Posted: 2004-08-13 11:44

"and the "saturday night live " hosted by him was the worst I've seen Big Smile "

He would probably have been better as a host for "The Muppet Show".Big Smile

 

Regards,

Niclas

 


kr
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Posted: 2004-08-13 20:39

these are mtge notes, not sure if 1st or 2nd... Angle there IMHO is the 'secured' nature of the bonds.  Yes, you can call them 'secured by real estate assets', but as you say, if the value of the secured assets is so dependent on management, I don't consider that secured for precisely exactly your reason - he can be expected to use his ability to damage the assets as a bargaining chip. 

Anyhow what they should have done was to secure the bonds with the DJT brand, which weirdly enough seems to have retained its value even in the stress scenario.  Then they could have had The Donald up and fuck off, and find a bunch of enterprising mobsters to operate the casino. 


my bank got pwnd

rowdyroddypiper
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Posted: 2004-08-13 22:19

Okay so this is more along the lines of what I was thinking initially.  I would be absolutely certain that they aren't 2nds  the first would have to be astronomically large to have a $1bn plus second on it.   I guess the question is are the loans recourse to the Borrower, which I am presuming is the DJT holding co. or are they non-recourse to the borrower.  That actually may be academic.  If they have a dispute DJT can waste the assets while the lender tries to get to it.  If DJT gets a little to demaning then the lenders can try and have him removed from his management contract.  In some sick way they both need eachother to survive.  Far be it from me to tell DLJ Merchant Partners what to do, but I think they have totally cocked up on this one.  It's a lot easier to find someone to run a hotel/casino than it is to find a hotel/casino to manage.  Fuck, some jerkoff who's crazy to be on TV would probably buy a casino and let you film it...ummmm....yeah...

I've had this smacked into my head quite a bit "You cannot make a good loan to a bad borrower"  and I tend to believe it.  I don't think Trump is an idiot to answer the question of this thread.  Losing your CEO position while remaining Chairman is slick.  Trading Half of your equity stake for a 4/5 point cut on your debt payments is also quite smooth.  Does anyone think he could have sold 25% of the company for something on the order of 450mm (I'm thinking the cut in DS payments at a healthy discount over the next 10 years?). 

Didn't Getty say, owe the bank $100 you're in trouble, owe the bank $100mm and the bank is in trouble (this quote is of course unadjusted for inflation).

 


We got all markets on lock from meat to stock

kr
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Posted: 2004-08-13 22:54
ok, 1st mtge notes, gteed by Plaza Assocs and Taj Assocs.  These entities hold land parcels in AC besides the casino.  There are some equipment leases in there which are not going to take a cut.  My assumption is that there is no further recourse, but I didn't look at the docs.

The interesting distinction here is that it's not only his ability to control the asset value directly through spending/upkeep/whatever, but so much of the asset value is in the brand in this case.  I specifically do not like this type of 'relationship loan' - security interest means nothing in this case.  I think this kind of deal sells easily too, which is unfortunate - you tell the buyers "it's a name you've heard of", and they think more of the assets rather than less. 

I thought it was - lend a guy a million, you own him... lend a guy a billion, he owns you.  In this case, the asset can bleed for a long long time and cost everybody a fortune.  They don't have enough guts to take the horse back behind the barn and shoot it just yet.  CSFB will be pumping plenty more money into this stupid thing before it's all over.  Tristate casino regulations are in the midst of changing and AC's days are truly numbered. 

my bank got pwnd

Graeme


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Posted: 2004-08-15 10:09

Back to the original question - the answer is clearly yes. A month or so ago, BBC Prime were showing re-runs of Ruby Wax interviews, she was interviewing the Duck. Well, his wonderful business sense doesn't make for good TV, but his presidential campaign does, apparently. His numer one campaign point: the US taxpayer gets to save on presidentioal expenses - no need for Airforce One, because he can supply his own aeroplane.

She definitely pissed him off, the interview kind of didn't run it's full course. Perhaps he isn't a complete idiot. The worst idiots are those that don't realise you think they are an idiot.

 

 


Graeme West

James
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Posted: 2004-11-22 22:53

Empirical evidence:

http://www.washingtonpost.com/wp-dyn/articles/A3373-2004Nov22.html

I remind all NPers, both kr and I warned folks off these bonds at any yield months ago. Cash HY bonds are hard to short (pain in the you-know-where), but it can be done. But basically, months ago, you could not find anyone who would let you short Trump (I am talking big house desks, like CSFB, BoAs, Goldman, JPM, etc.).

Now that they are in distressed quotes (where they should have been) there may be one last puff on the cigar butt, but I don't think so. Last reports I had were that the glitz looked tatty at these casinos, so the only solution is to offer better odds (like the family owned small Vegas casinos). Better odds means  increased volume in core customers, but thinner margins. Thinner margins means long theta on your recovery value.

kr did you ever figure out a way to short this paper?


"Reality is that which, when you choose not to believe in it, doesn't go away." Phillip K. Dick

Martingale
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Posted: 2004-11-22 23:00
Atually I heard it from radio this morning about the bankruptcy news, I was thinking about this thread, but got into some really boring stuff and forgot about it, untill James brings it up....

Nonius
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Posted: 2005-01-23 08:17

hmmmmm, maybe not....ok, I need to go massage my brains....I'll be back in a few


Chiral is Tyler Durden

nikol


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Posted: 2019-02-04 18:16
I was looking for an absolutely different subject and found this beautiful thread..

So, what ? :)))

chiral3
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Posted: 2019-02-05 01:49
LOL, back when you could call him any well-deserved name and it was apolitical and arguably obvious. Guy's a twat, always has been. Love KR's line, very prescient: "Disclosure of any troubles there wouldn't hurt Trump. He's a celebrity, ranking with the bug-eaters, lewdsters and screamers who dominate TV. Total failure would only increase his stature."

Nonius is Satoshi Nakamoto. 物の哀れ

Strange


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Posted: 2019-02-05 02:34
"Guy's a twat, always has been"
Except now he's a twat with a huge reach :(

Eher Ende mit Schrecken als Schrecken ohne Ende

nikol


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Posted: 2019-02-05 11:45
He is an expert in making profit out of bankruptcy.
Seems, today he aims to do it at the global scale.
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