Donald Trump ended his war with bondholders of the casino company that bears his name, settling Tuesday for 10 percent of Trump Entertainment Resorts once it emerges from bankruptcy.
The real estate mogul announced he and his daughter, Ivanka, were abandoning their battle over control of the company, which filed for Chapter 11 bankruptcy protection in February. It was the third such filing for the company or its corporate predecessors.
The deal reached with 61 percent of the bondholders would give Donald Trump common stock and warrants worth 10 percent of the reorganized company.
The three Atlantic City casinos _ Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino and Trump Marina Hotel Casino _ will continue to use the Trump name, while trump himself will be permitted to use it on other gambling ventures in states that do not compete directly with New Jersey.
"I have always felt a tremendous responsibility to New Jersey, and especially to Atlantic City," Trump said. "Therefore, I am motivated to give the properties the best chance to succeed on a reorganized basis. Had circumstances not changed, I would have aggressively continued to pursue the debtors' plan with the objective of acquiring control of and revitalizing a company that I have not run for many years."
But he said the company's reorganization plan "has become mired in highly expensive and distracting litigation that threatens the entire enterprise. This prolonged and continued litigation and the associated cost to the estate would mean that whoever won under their plan would ultimately lose."
Trump Entertainment CEO Mark Juliano was not immediately available for comment.
The deal also would end the Trumps' litigation against the bondholders, and release them from more than $100 million of claims he had been pressing against them.
Before the deal was reached, the bondholders had increased their offer to $225 million. The Trumps were offering $114 million with Dallas-based Beal Bank.
Trump Entertainment had favored the Trumps' plan, saying it would have left the company with more cash to work with, and that the bondholders' plan used too much cash to pay down debt.
Marc Lasry, chairman and CEO of Avenue Capital Group, a member of the Ad Hoc Committee, praised the change of heart from Trump, and welcomed the reality TV star as a future partner.
"We are pleased to have reached an agreement with the Trumps that will avoid continued litigation over the debtors' plan, permit the use of the Trump brand on the three Atlantic City casinos, facilitate confirmation of the noteholders' plan and enable Mr. Trump to be a sizable shareholder of the reorganized company," he said.
Kristopher M. Hansen, the attorney for the bondholders, said the pact should bring a speedy end to a costly legal battle that had been set for a January showdown in U.S. Bankruptcy Court in Camden.
The company had been struggling with crushing debt that became even more painful when the economy soured and competition from slots parlors in Pennsylvania and New York increased, siphoning away some of Atlantic City's best customers by offering them places to gamble closer to home.