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The company owns three casinos in Atlantic City -- Trump Taj Mahal, Trump Plaza and Trump Marina -- and had missed a Dec. 1 bond payment of $53 million.
The company received three previous extensions over the last month to continue talks.
High-yield bond analyst Barbara J. Cappaert predicted that the company was heading toward a prepackaged bankruptcy with a restructuring agreement attached, as opposed to an out-of-court restructuring or traditional Chapter 11 filing.
"A traditional bankruptcy would take much longer to resolve and could impair [the company's] value further," said Cappaert, who is with KDP Investment Advisors Inc., of Montpelier, Vt. "A prepackaged deal could resolve the default faster and requires only two-thirds of the bondholders" to approve it.
"They need to get this resolved," she said, "so they can focus on shoring up declining cash flow at the properties."
The Atlantic City gambling market has been struggling amid a recession and new slots competition from Pennsylvania and New York. Two of the three Trump casinos posted revenue declines last month. Only the Taj Mahal showed an increase -- of 9.8 percent.
Trump Entertainment has been in discussions to renegotiate its debt since a forbearance accord was reached Dec. 31.
Holders of most of Trump Entertainment's $1.25 billion in notes and its lender, Beal Bank Nevada, which is owed $490 million, agreed not to exercise default rights for interest or principal payments as long as talks continued.
Donald Trump owns 28 percent of Trump Entertainment and remains its largest single shareholder.
Trump shares closed at 22 cents, down 4.35 percent.
Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.
To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to <a href=http://www.philly.com>http://www.philly.com</a>. Copyright (c) 2009, The Philadelphia Inquirer Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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