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Trump’s bad bet: How too much debt drove his biggest casino aground
Washington Post
By Robert O'Harrow Jr.
January 18, 2016

For months in 1987, Donald Trump maneuvered to take control of the hulking, unfinished Taj Mahal casino in Atlantic City. He snapped up stock in the parent company after its owner died and then made a surprise bid to take the company private.

With the Taj, along with two casinos he already owned in the city, Trump could dominate gambling on the East Coast. But first he needed to convince state gambling regulators that he was financially stable and could raise enough cash to complete the $1 billion project.

On Feb. 8, 1988, at a licensing hearing in front of the state Casino Control Commission, Trump said he could pull it off for one main reason: He was Donald Trump. Because of his reputation as a dealmaker, he said, bankers were lining up to lend him money at prime rates. That meant he could avoid the risky, high-interest loans known as junk bonds.

“I’m talking about banking institutions, not these junk bonds, which are ridiculous,” Trump testified, according to transcripts of the hearing. “The funny thing with junk bonds is that junk bonds [are] what really made the companies junk.”

Trump received the approvals he needed for the Taj, but the prime-rate loans never materialized. Determined to move forward, he turned to the very junk bonds he had derided in the hearing. He agreed to pay the bond lenders 14 percent interest, roughly 50 percent more than he had projected, to raise $675 million. It was the biggest gamble of his career.

In April 1990, the Taj opened as the world’s largest casino-hotel complex, joining Trump’s other holdings already operating in Atlantic City, the Trump Plaza and Trump’s Castle. But Trump could not keep pace with his debts on the three casinos. Six months later, the Taj defaulted on interest payments to bondholders as his finances went into a tailspin. In July 1991, Trump’s Taj Mahal filed for bankruptcy, the first and most significant of the four that his companies have experienced.

The bad bet on the Taj Mahal continues to haunt Trump, the leader in the race to become the Republican nominee for president. During recent GOP debates, opponents and journalists have repeatedly asked why he should be trusted to manage the country after losing lenders hundreds of millions of dollars. Trump responded that he was shrewd for using “the laws of the country to my benefit” and has distanced himself from the Taj’s troubles, saying he never personally declared bankruptcy.

extensive investigative article continues here;

https://www.washingtonpost.com/investigations/trumps-bad-bet-how-too-much-debt-drove-his-biggest-casino-aground/2016/01/18/f67cedc2-9ac8-11e5-8917-653b65c809eb_story.html?utm_term=.b62645b14291