Donald Trump says he's a billionaire. in fact, the developer professes to be so liquid you almost expect to hear him squish as he steps out with another sultry sponge. So, you might wonder, why has Trump needed to personally borrow $24.5 million from the financially strapped public company that owns his four eponymous casinos? And why did Trump, chairman of the gambling venture, also need an advance on his entire 1999 salary and expense account (another $1.5 million payout)?
According to a March 31 Securities and Exchange Commission filing by Trump Hotels & Casino Resorts, the Donald received the $26 million in the latter half of 1998, securing the loans by pledging "certain receivables due" to him as well as stock in the casino operation (with 15.9 million shares, or 42 percent, Trump is THCR's largest stockholder). Last week, Trump described the hefty borrowing and salary-expense advance as just "another form of compensation," though his employment contract, also on file with the SEC, does not address lulus like loans or advances.
Trump said the one-year loans carried an interest rate equivalent to Chase Manhattan's prime rate. SEC records show that Trump used part of the THCR money to repay a $13.5 million personal debt to the investment firm Donaldson Lufkin & Jenrette.
Trump's borrowing comes at a time when the casino company is saddled with more than $2 billion of long-term debt. THCR's stock, now trading at about $6, has plummeted 83 percent since its 1996 high of $35. In this year's first quarter, THCR ate $25.3 million, pushing the firm's total losses to more than $170 million since 1996. In a recent Fortune magazine review of America's most admired companies, THCR finished dead last among 469 firms surveyed. The casino operation was chided for, among other things, its quality of management, employee talent, and use of corporate assets.
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