Trump This April Fool's

In 1996, Trump Hotels (NYSE: DJT  ) changed hands for up to $35.50 a share. The stock trades today at around $2.28. Hold the calculator: That's a 93.6% plunge. Read the latest annual report and you may wonder why it's so high. And that's no joke.

The company lumbers under $1.8 billion in long-term debt, which works out to a ratio of debt to capital in the area of 331 to 1. The company says, "Management believes that this indebtedness and associated interest expense hinders the Company's ability to reinvest in the maintenance of its owned properties at desired levels."

Yikes. When you have suffered operating losses for the last three years and you can't do maintenance, especially in an image business like gaming, you are in trouble.

Making matters worse, the $1 billion MGM Mirage (NYSE: MGG  ) and Boyd Gaming (NYSE: BYD  ) Borgata joint venture is the toast of Atlantic City, while legislation enacted in New York in 2001 is taking root in bricks and mortar on Indian lands. Big-time Vegas names like Caesars Entertainment (NYSE: CZR  ) and new-to-casino outfits like track operator Empire Resorts (Nasdaq: NYNY  ) will try to lure Atlantic City gamblers with new properties just 40 miles from New York City.

The list of threats goes on and on -- from neighboring states approving gaming and slots to customers not driving because of higher gasoline prices.

Trump Hotels has a $73.1 million interest payment due May 1. The company says that it "cannot ensure that it will have sufficient funds on hand to make the interest payment within the 30-day grace period." Trump's auditor issued a "going concern" warning, and Moody's (NYSE: MCO  ) recently downgraded some of its debt.

The white knight in Trump's future is an affiliate of Credit Suisse Group (NYSE: CSR  ) with a proposal to invest $400 million to recapitalize the company. Shareholders should understand that the deal necessarily dilutes shares of current holders. All kidding aside, if that deal fails to materialize, Trump shareholders may feel the joke is on them.

Interested in talking about gaming or gaming stocks with other investors? Try the Motley Fool'sGaming discussion board. Or, discuss the merits of the Borgata on the MGM Mirage discussion board.

Fool contributorW.D. Crottyremembers the old Rule Breaker Portfolio shorting Trump in 1997 at $8.50 and then covering 2 1/2 years later at $4.87 for a 42.7% profit, but he does not own stock in any of the companies mentioned.

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