GOMES GAMING | News
A.C. exec among bidders for Trump
BY JUDY DeHAVEN
A prominent Atlantic City executive and a private equity firm have emerged as contenders for Donald Trump's casino empire.
Dennis Gomes, a former Aztar executive who once ran the Trump Taj Mahal, has lined up a team of investors to buy Trump Entertainment Resorts, three sources familiar with the talks said.
The other bidder is a private equity firm, the sources said. The name of the private equity firm could not be confirmed last night.
Gomes declined comment. Trump, the chairman and largest shareholder in the casino company that bears his name, did not return a call for comment. And Tom Hickey, spokesman for Trump Resorts, declined comment.
Gomes was a colorful Atlantic City executive well-known for his gimmicky casino promotions. In one of his more successful stunts, he brought a tic-tack-toe-playing chicken to the Tropicana. But one stunt that bombed took place while Gomes ran the Taj: He recreated the infamous diving horse, which brought more jeers than gamblers.
Gomes, who got his start in the industry as a mob investigator in Nevada, also grabbed national headlines in the 1990s, when Trump lured him from rival mogul Steve Wynn, sparking a years-long lawsuit. Later, after he was credited with turning the Taj around, Gomes and Trump parted ways amid another controversy: Trump said he fired Gomes; Gomes said he canceled his contract.
But the two men are said to have patched up their differences long ago. And Gomes, who retired as Aztar's president of resort operations in 2005, has been looking for a new casino venture. His company, Gomes Gaming Management, partnered with real estate mogul Morris Bailey, who the sources said is also involved in the Trump Resorts bid, and others for a Pennsylvania slot parlor, but they lost out.
For months, Gomes was rumored to be interested in at least one of the Trump casinos. But talks reached a zenith two weeks ago, when the Taj's general manager, Rosalind Kraus, was spotted giving Gomes and a group of men in dark suits a tour of the casino.
When asked about the visit, Gomes said he was merely there to have dinner a veal chop at Mark Anthony's restaurant.
Analysts have said a deal to buy Trump Resorts could prove difficult, however. The company, which owns Trump Plaza, Trump Marina as well as the Taj, has struggled since it emerged from Chapter 11 bankruptcy protection two years ago. It still carries a burdensome debt load and has been hard hit by competition from slot parlors in Pennsylvania and New York.
Revenue at the three casinos has fallen 5.2 percent for the first four months of the year. In the meantime, the company's hopes of expanding beyond A.C. were dashed late last year when it, too, lost out on a bid for a Philadelphia slot parlor. So, in March, Trump Resorts hired Merrill Lynch to help it evaluate its strategic options, and last month it announced it had received "preliminary and conditional indications of interests from parties proposing to acquire the company."
News a buyer was in the wings caused Trump shares to soar. The shares, which had fallen 27.5 percent since the company announced it had hired Merrill, hit a 52-week low of $12.98 on May 17, the day before Trump announced it had potential buyers for the company. Yesterday, shares closed at $16.06, off 24 cents in trading on the Nasdaq stock market.
Analysts said the most likely buyer would be the private equity, which has taken a great interest in the casino industry. Its biggest bet to date has been the $17.1billion buyout of Harrah's Entertainment, the world's largest gambling company, by Texas Pacific Group and Apollo Management. That deal is awaiting regulatory approval.
Despite the private equity's recent love affair with the casino industry, analysts have said bond covenants and other issues could make a sale of Trump Resorts expensive and therefore difficult.
A buyer would have to pay a premium on the price of the company's bonds. And Trump has veto power over the sale of any of the casinos. If he waives that right, the company would have to give him up to $100million for personal tax liabilities he would incur as a result of a sale. That could make the price too high for the deal to make sense, analysts have said. In addition, a buyer would inherit Trump's dilemma his overexposure in Atlantic City, which is struggling against new competition, analysts said.
<<Back to News