The Donald

By Mike Myatt, Chief Strategy Officer, N2growth

The Donald is up to his old tricks again…When everybody and their brother is looking for a bailout, the Donald simply engineers his own rescue by playing hardball with his creditors. Remember it was The Donald who said “If you owe the bank a million dollars the bank owns you, but if you owe the bank a billion dollars you own the bank.” This particular time around the magic number seems to be $1.25 billion dollars, which is the amount of the debt restructuring he’s trying to negotiate with bond holders. In today’s post we’ll take a look at “The Art of The Deal” Trump style…

Trump casinos received a two week extension today to reach an agreement with bond holders on restructuring $1.25 billion in debt. My question is this…Do you really think Trump cares whether or not the debt is restructured? He has previously sought Bankruptcy protection on two other occasions so why not a third time? What I’m trying to point out is that being cross purposes with creditors is not awkward for Trump, rather it is part of his strategic plan. What I don’t understand is why investors haven’t awakened to the game…Well actually I do; it’s called greed.

For some time now Trump’s business model has been to use his formidable personal brand and the cash flow from his casinos to leverage into real estate deals and business opportunities well beyond his repayment capabilities. He adroitly maneuvers investors and lenders into a position where if they don’t bend to his will by restructuring the terms and conditions of his financial obligations he’ll seek shelter in the safe haven of the Bankruptcy courts. Either way he wins…he reduces his debt service and buys the time to continue to grow his business at the expense of his investors and lenders.

While you have to love his chutzpah, I’m not sure you have to like his style, or his hair…