Be Pennywise..

Trump began his career at his father’s company, the Trump Organization, and initially concentrated on his father’s preferred field of middle class rental housing. One of his first projects was the revitalisation of the ailing Swifton Village apartment complex in Cincinnati, Ohio – turning a 1200 unit complex with a 66% vacancy rate to 100% occupancy within a year. When the Trump Organization sold Swifton Village for $12 million they cleared $6 million in profit. In the 1970s he benefited from the financially strained New York City government’s willingness to give tax concessions in exchange for investment at a time of financial crisis with the redevelopment of the bankrupt Commodore Hotel. He was also instrumental in steering the development of the Javits Convention Center on property he had an option on.The development saga of the Javits Convention Center brought Donald Trump into contact with the New York City government when a project he’d estimated could’ve been completed by his company for $110 million ended up costing the city between $750 million to $1 billion. He offered to take over the project at cost but the offer was not accepted.A similar situation would arise in the city’s attempt to restore the Wollman Rink in Central Park – a project started in 1980 with an expected 2 1/2 year construction schedule that was still, with $12 million spent, nowhere near complete in 1986. Trump offered to take over the job at no charge to the city, an offer that was initially rebuffed until it received much local media attention. Trump was given the job which he completed in six months and with $750,000 of the $3 million budgeted for the project left over. (He used the leftover money to renovate the adjacent skatehouse and restaurant.)

Bankruptcy

By 1990, the effects of recession left Trump unable to meet loan payments. Trump financed the construction of his third casino, the $1 billion Taj Mahal, primarily with high-interest junk bonds. That put him at a disadvantage with competitors who used more of their own money to finance their projects, industry experts have said. Things were so bleak for Trump at this time that in the August 21, 1990 edition of the Jersey Record, columnist Mike Kelly wrote “If we still had debtors’ prisons, Trump would be in the dungeon.” Kelly added that “Donald Trump is a Third World Nation.” Although he shored up his businesses with additional loans and postponed interest payments, by 1991 increasing debt brought Trump to business bankruptcy and the brink of personal bankruptcy. Banks and bond holders had lost hundreds of millions of dollars, but opted to restructure his debt to avoid the risk of losing more money in court. The Taj Mahal re-emerged from bankruptcy on Oct 5, 1991, with Trump ceding 50% ownership in the casino to the original bondholders in exchange for lowered interest rates on the debt and more time to pay it off.

On Nov 2, 1992, the Trump Plaza Hotel was forced to file a prepackaged Chapter 11 Bankruptcy protection plan after being unable to make its debt payments. Under the plan, Trump agreed to give up a 49 percent stake in the luxury hotel to Citibank and five other lenders. In return Trump would receive more favorable terms on the remaining $550+ million owed to the lenders and retain his position as chief executive, though he would not be paid and would not have a role in day-to-day operations.

By 1994, Trump had eliminated a large portion of his $900 million personal debt and reduced significantly his nearly $3.5 billion in business debt. While he was forced to relinquish the Trump Shuttle (which he had bought in 1989), he managed to retain Trump Tower in New York City and control of his three casinos in Atlantic City. Chase Manhattan Bank, which lent Trump the money to buy the West Side yards, his biggest Manhattan parcel, forced the sale of a parcel to Asian developers. According to former members of the Trump Organization, Trump did not retain any ownership of the site’s real estate – the owners merely promised to give him about 30 percent of the profits once the site was completely developed or sold. Until that time, the owners wanted to keep Trump on to do what he did best: build things. They gave him a modest construction fee and a management fee to oversee the development. The new owners also allowed him to put his name on the buildings that eventually rose on the yards because his well-known moniker allowed them to charge a premium for their condos.

In 1995, he combined his casino holdings into the publicly held Trump Hotels & Casino Resorts. Wall Street drove its stock above $35 in 1996, but by 1998 it had fallen into single digits as the company remained profitless and struggled to pay just the interest on its nearly $2 billion in debt. Under such financial pressure, the properties were unable to make the improvements necessary for keeping up with their flashier competitors.

Problems loomed for Trump’s casino resorts. In a May 28, 2004, Wall Street Journal article, Trump said the specter of bankruptcy bothered him “from a psychological standpoint,” but added, “it really wouldn’t matter that much.” A number of his bondholders disagreed. In the same article, Meyer Marvald, a Florida retiree who said he owned about $44,000 of the bonds, claimed “[Trump] has the Sword of Damocles hanging over our heads.” On October 21, 2004, Trump Hotels & Casino Resorts announced a restructuring of its debt. The plan called for Trump’s individual ownership to be reduced from 56 percent to 27 percent, with bondholders receiving stock in exchange for surrendering part of the debt. Since then, Trump Hotels has been forced to seek voluntary bankruptcy protection to stay afloat. After the company applied for Chapter 11 Protection in November, 2004, Trump relinquished his CEO position but retained a role as Chairman of the Board. In May, 2005 the company re-emerged from bankruptcy as Trump Entertainment Resorts Holdings.