ATLANTIC CITY - Investors in the three Trump casinos in Atlantic City are taking the reins of the struggling company that owns the resorts.
The New Jersey Casino Control Commission gave unanimous approval today to a group of bondholders led by New York-based Avenue Capital Management to own Trump Entertainment Resorts.
Trump Entertainment plans to emerge soon from its third bankruptcy.
In approving the plan, Casino Control Commission chair Linda Kassekert said: "I am hopeful that the implementation of this reorganization plan will ultimately provide the Trump properties with the means to compete and to thrive."
A U.S. Bankruptcy judge ruled April 12 in favor of a restructuring plan submitted by Trump Entertainment, its bondholders and Donald J. Trump to maintain control of the casino firm over a plan presented by billionaire financier and takeover artist Carl Icahn.
Avenue Capital, which will be the company's largest equity holder at 21.7 percent, said the plan will drastically reduce the company debt from $1.75 billion to $334 million.
Avenue Capital will infuse $225 million into the company; of that, $125 million will go directly for debt payment, the remaining amount for capital expenses, cash and administrative costs.
Donald Trump, who now owns 5 percent of the company, can own no more than 5 percent more.
Trump Entertainment is expected to keep trying to sell the smallest hall, Trump Marina, which it had tried to sell before filing for bankruptcy in February 2009. It also owns the Taj Mahal and Trump Plaza.
CEO Mark Juliano acknowledged before the panel that several parties have shown interest in buying Trump Marina, which sits next to the market-leading Borgata Hotel Casino & Spa.
"We are entertaining a variety of offers now, and will be presenting them to the board shortly," he said.
Gaming analysts say the approval of the restructuring plan will give the Trump casinos a fresh start.
"Significantly reducing the debt burden will allow the new owners to reinvest in the business," said Andrew Zarnett of Deutsche Bank AG.
The outcome of the struggle between the two financial titans - Trump and Icahn - was surprising in that Icahn, known for going after assets in distress and buying at a discount, offered double what the bondholders' and the casino company's plan put forth, and would have left the struggling firm completely debt-free.
Icahn, at the time, was also on a roll. Last summer, an investor group led by the billionaire took control of the Tropicana Casino Resort on the Boardwalk for $200 million in a bankruptcy auction.
During 2 1/1 weeks of courtroom testimony, Trump and his daughter Ivanka said they would not commit to allowing Icahn full use of their name and likeness for the Trump casinos if he won control - which turned out to be significant.
In her 121-page ruling, Judge Judith Wizmur essentially linked the Trump brand as essential to keeping the three casino hotels - Trump Taj Mahal, Trump Plaza and Trump Marina - in business.
Without the Trump name, Wizmur argued, the casinos would not exist.
Icahn, who runs Icahn Partners L.P., a hedge fund out of New York, and has a net worth of about $9 billion, according to Forbes magazine, has appealed the decision. That appeal remains pending.
If Icahn had prevailed in taking over the Trump casinos, it would have elevated him as the biggest casino operator in town, on par with Harrah's Entertainment Inc., which owns four properties here.
Trump Entertainment emerged from its second bankruptcy in May 2005.
However, for this go-round, the climate to survive has never been more challenging.
New slots competition from Pennsylvania has been hard on the Trump casinos and the rest of Atlantic City. Revenue for June - typically a peak month for the Shore resort - was down 11.1 percent from a year ago.
This month, about 700 table games are being added to Pennsylvania's nine casinos, a move that is expected to further hurt Atlantic City's main industry.
Shortly before today's approval, Avenue N.J. Entertainment L.L.C., the new owner of Trump Entertainment, was granted interim casino authorization.
Asked why he was entering the gaming industry, Marc Lasry, chairman and chief executive officer of Avenue Capital, which runs new ownership group Avenue N.J Entertainment and which leads a group of several hedge funds making up the ownership group, testified: "We feel we are entering the market at the worst part of the cycle and, going forward, there are going to be huge opportunities for us."
When asked what needed to be done to turn things around, he said: "Ultimately, what you have here is great assets. It's a matter of getting people to come here, such as more families, and making it more of an experience."
Contacted in New York, Trump father and daughter said: "We have a much improved company and we look forward to being there a lot."