He saved Donald Trump when Trump could have been bankrupted in Atlantic City like a rookie playing Monopoly.
But Ross is a sharp businessman who looked beyond the spreadsheet of numbers. Saving Trump saved the investors -- including Ross's company -- as well.
From Forbes last December:
Trump made a bold bet on Atlantic City when he opened a third casino there -- the colossal Taj Mahal -- in April 1990. Even riskier: He financed the project with $675 million in junk bonds at a 14% interest rate. Within months Trump was struggling to make the massive bond payments as Atlantic City floundered.
In stepped Ross, then head of Rothschild Inc’s bankruptcy advising team, to represent bondholders, who were pondering forcing the casino into involuntary bankruptcy and ousting Trump. Ross reportedly saw crowds pressed against Trump’s limo windows to get a peek at the mogul, and realized the value of Trump’s celebrity.
He struck a prepackaged bankruptcy deal: Trump would give up 50% of his stake in the Taj but would receive better debt terms and would remain in control. The Donald was back in business: He ultimately made similar deals for his other troubled properties and climbed out of debt and back onto the Forbes 400.Too big to fail. Ross and fellow billionaire Carl Icahn decided the property was worth more money with Trump's involvement than without Trump.
Ross and Icahn did not spare Trump because they liked the guy.
They spared him because Trump had value added to his brand. The Forbes story was wrong. That was not the Taj Mahal casino.
It was the Trump Taj Mahal.
In just a decade from turning the seedy Commodore Hotel into the Hyatt Regency New York, The Donald had made his family name as important as that ivory-white marble mausoleum on the south bank of the Yamuna river in the Indian city of Agra built in 1632.
Branding is more difficult than critics realize. Everybody, by the way, does it. We usually call it reputation.
From the New York Post last November:
The troubled casino had just missed an interest payment on the bonds, and the two men were leaning toward pushing the Atlantic City business into bankruptcy, interviews with the men reveal.
“We could have foreclosed [on the Trump Taj Mahal], and he would have been gone,” Ross, the chief restructuring adviser for Rothschild & Co., which was representing the bondholders at the time, told The Post, speaking of the eventual 45th president of the US.
Icahn was the Taj’s No. 1 bondholder.Ross has spent plenty of time in limos in his career. But that trip to Atlantic City in the autumn of 1990 may have made him the most money.
Let that be a lesson to borrowers and lenders.
I included the episode in "Trump the Establishment."
Kindle is now taking orders for "Trump the Establishment." The Kindle version appears on March 1.
"Trump the Establishment" is already available in paperback.
This is the sequel to "Trump the Press," which covered the nomination. The original -- "Trump the Press" -- is available on Kindle, or in paperback on Create Space.
Autographed copies are available by writing me at DonSurber@GMail.com
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