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Trouble in Trump town as tycoon's fortune dwindles
By Stephen Foley in New york
Tuesday, 2 December 2008
After years as perhaps the most recognisable face of capitalist success and excess, Donald Trump is suddenly bogged down in a string of legal and financial battles across his property and entertainment empire.
From Dubai to Chicago, from Atlantic City to Aberdeen, the host of the US version of The Apprentice is scaling back his ambitions for global domination, trying to fend off furious bankers and facing new questions from political opponents.
These are grim echoes of the past for a man who, during the recession of the early-Nineties, was forced to put large chunks of his business into bankruptcy, and even teetered on the edge of financial ruin. His re-emergence from that disaster is such a source of personal pride that he even sued the author of a book that estimated his wealth in mere millions, rather than billions, of dollars. The official tally – from Forbes magazine, which is the unofficial arbiter of these things – is that Mr Trump was worth $3bn (£2bn) at the last count, but that was before a string of disasters that was still unfolding yesterday.
It emerged that the Trump Organisation and its partners in Dubai were mothballing work on a 62-storey steel and glass skyscraper on one of the palm tree-shaped artificial islands in the Arabian Gulf. The development was meant to be a hotel and residential complex boasting Norman Foster bathtubs and furniture by the Italian designer Poltrona Frau, and Mr Trump had personally earmarked one of the penthouse suites. But demand has collapsed along with the fortunes of the wealthy that had flocked to Dubai in the boom.
Meanwhile, yesterday was also the deadline for Mr Trump's publicly-quoted casinos business to make a $53.1m interest payment – a payment it said it would have to skip because of its mounting financial troubles. Trump Entertainment Resorts' shares are pennies away from zero, the company having lost 99 per cent of its value in two years, a sure sign that investors think it will go bust – again. The firm, which owns three of the most opulent casinos in Atlantic City, the East Coast's answer to Las Vegas, has been in and out of bankruptcy protection twice in the past 20 years, and Mr Trump and the other directors have begun talks with bankers in the hope of saving it. Such is the sensitivity that the company issued a statement declaring that its own death would hardly graze the Trump fortune. It represents just 1 per cent of his personal holdings.
The trouble is that those other real estate interests are also showing strain, given the crumbling property market across the US. In Philadelphia, a Trump Tower with apartments slated to sell for $700,000 and up has been halted until the economy improves. And there is an even bigger mess in Chicago, where Mr Trump has half-built a hotel and condominium complex that will be taller than New York's Empire State Building. He is being sued by Deutsche Bank, which provided loans for the project and says he missed a deadline this month to pay off the remaining $334m. Mr Trump got his own suit in earlier, claiming Deutsche should have allowed an extension because the credit crisis counts as force majeure, equivalent to acts of God.
In Scotland, where he fought for two years to be allowed to build a controversial £1bn golf and luxury homes complex on an unspoilt stretch of the Aberdeenshire coast, members of the Scottish Parliament are questioning if the project will ever now get built. The suggestion is nonsense, George Sorial, the manager of Mr Trump's Aberdeen golf course, said yesterday, since all the tycoon's property interests are standalone businesses, and the Aberdeen golf complex is a long-term project. "Is Mr Trump still a billionaire?" asked Mr Soriel. "That's a silly question. Of course he is."
Feeling the crunch: Millionaires' woes
Sumner RedStone
The media mogul, who owns Paramount Studios, MTV and CBS, is in talks with bankers after breaching debt rules. Yesterday he sold his stake in Midway Games, and may have to break up the entire empire. According to the LA Times, Mr Redstone, 85, is also considering selling National Amusements, a chain of cinemas with 1,500 screens, mainly in the US, although it has expanded into the UK, Russia and Latin America.
Rupert Murdoch
The tycoon and his family have lost an estimated $4.8bn (£3.1bn) because of the crumbling share price of News Corporation, his global media empire. Its shares are down by more than half because media advertising revenues have dried up.
Oleg Deripaska
The Russian metals magnate (and occasional associate of the shadow Chancellor George Osborne) is on a list of friends of Vladimir Putin in line to access bailout funds from the Kremlin after he received cash calls from lenders including Merrill Lynch and Royal Bank of Scotland. His tumbling stake in Norilsk Nickel was used as collateral.
By Stephen Foley in New york
Tuesday, 2 December 2008
After years as perhaps the most recognisable face of capitalist success and excess, Donald Trump is suddenly bogged down in a string of legal and financial battles across his property and entertainment empire.
From Dubai to Chicago, from Atlantic City to Aberdeen, the host of the US version of The Apprentice is scaling back his ambitions for global domination, trying to fend off furious bankers and facing new questions from political opponents.
These are grim echoes of the past for a man who, during the recession of the early-Nineties, was forced to put large chunks of his business into bankruptcy, and even teetered on the edge of financial ruin. His re-emergence from that disaster is such a source of personal pride that he even sued the author of a book that estimated his wealth in mere millions, rather than billions, of dollars. The official tally – from Forbes magazine, which is the unofficial arbiter of these things – is that Mr Trump was worth $3bn (£2bn) at the last count, but that was before a string of disasters that was still unfolding yesterday.
It emerged that the Trump Organisation and its partners in Dubai were mothballing work on a 62-storey steel and glass skyscraper on one of the palm tree-shaped artificial islands in the Arabian Gulf. The development was meant to be a hotel and residential complex boasting Norman Foster bathtubs and furniture by the Italian designer Poltrona Frau, and Mr Trump had personally earmarked one of the penthouse suites. But demand has collapsed along with the fortunes of the wealthy that had flocked to Dubai in the boom.
Meanwhile, yesterday was also the deadline for Mr Trump's publicly-quoted casinos business to make a $53.1m interest payment – a payment it said it would have to skip because of its mounting financial troubles. Trump Entertainment Resorts' shares are pennies away from zero, the company having lost 99 per cent of its value in two years, a sure sign that investors think it will go bust – again. The firm, which owns three of the most opulent casinos in Atlantic City, the East Coast's answer to Las Vegas, has been in and out of bankruptcy protection twice in the past 20 years, and Mr Trump and the other directors have begun talks with bankers in the hope of saving it. Such is the sensitivity that the company issued a statement declaring that its own death would hardly graze the Trump fortune. It represents just 1 per cent of his personal holdings.
The trouble is that those other real estate interests are also showing strain, given the crumbling property market across the US. In Philadelphia, a Trump Tower with apartments slated to sell for $700,000 and up has been halted until the economy improves. And there is an even bigger mess in Chicago, where Mr Trump has half-built a hotel and condominium complex that will be taller than New York's Empire State Building. He is being sued by Deutsche Bank, which provided loans for the project and says he missed a deadline this month to pay off the remaining $334m. Mr Trump got his own suit in earlier, claiming Deutsche should have allowed an extension because the credit crisis counts as force majeure, equivalent to acts of God.
In Scotland, where he fought for two years to be allowed to build a controversial £1bn golf and luxury homes complex on an unspoilt stretch of the Aberdeenshire coast, members of the Scottish Parliament are questioning if the project will ever now get built. The suggestion is nonsense, George Sorial, the manager of Mr Trump's Aberdeen golf course, said yesterday, since all the tycoon's property interests are standalone businesses, and the Aberdeen golf complex is a long-term project. "Is Mr Trump still a billionaire?" asked Mr Soriel. "That's a silly question. Of course he is."
Feeling the crunch: Millionaires' woes
Sumner RedStone
The media mogul, who owns Paramount Studios, MTV and CBS, is in talks with bankers after breaching debt rules. Yesterday he sold his stake in Midway Games, and may have to break up the entire empire. According to the LA Times, Mr Redstone, 85, is also considering selling National Amusements, a chain of cinemas with 1,500 screens, mainly in the US, although it has expanded into the UK, Russia and Latin America.
Rupert Murdoch
The tycoon and his family have lost an estimated $4.8bn (£3.1bn) because of the crumbling share price of News Corporation, his global media empire. Its shares are down by more than half because media advertising revenues have dried up.
Oleg Deripaska
The Russian metals magnate (and occasional associate of the shadow Chancellor George Osborne) is on a list of friends of Vladimir Putin in line to access bailout funds from the Kremlin after he received cash calls from lenders including Merrill Lynch and Royal Bank of Scotland. His tumbling stake in Norilsk Nickel was used as collateral.
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