The Pre-DWAC Fiasco: Recalling Trump's First Attempt At Running A Public Company

This week’s news that Digital World Acquisition DWAC was merging with Trump Media & Technology Group caught many people by surprise — not the least being those who’ve tracked former President Donald Trump’s highs and lows in the private sector.

The notion of having Trump Media & Technology Group on the Nasdaq is particularly intriguing when one considers Trump’s lone attempt to run a publicly listed company.

What Happened: On Jun 7, 1995, the real estate mogul’s Trump Hotels & Casino Resorts raised $140 million in an initial public offering. When planning for its IPO, the company guaranteed investors they would profit from “the widespread recognition of the ‘Trump’ name and its association with high quality amenities and first class service.”

The fact the company filed for bankruptcy three years earlier was not emphasized during the IPO push.

Trump Hotels & Casino Resorts served as a holding company that owned the Trump Plaza Hotel and Casino in Atlantic City, New Jersey, with the plan of adding other Trump-branded properties. The company was listed on the NYSE under Trump’s initials, DJT, and opened for trading at $14 per share.

Initially, the company was well received on Wall Street — a strong economy in the mid-1990s coupled with a favorable public image that Trump cultivated resulted in investor confidence. Shares peaked at $35 in 1996 and Trump returned to Forbes list of the wealthiest 400 people for the first time in seven years.

Unfortunately for its shareholders, the euphoria was ephemeral. In 1996, the company purchased a pair of Trump’s financially troubled Atlantic City casinos, the Trump Taj Mahal and the Trump Castle, which saddled the publicly traded company with more than $1 billion in debt.

Within the year, share prices sank to $12. Within nine years of its IPO, Trump Hotels & Casino Resorts lost $637 million. The company declared bankruptcy in 2004 with $1.8 billion in debt. The NYSE froze trading and later delisted the company.

Trump Hotels & Casino Resorts was reorganized as Trump Entertainment Resorts and switched to the Nasdaq in 2005 under the TRMP ticker. But history repeated itself: its Nasdaq debut mirrored its NYSE premiere by opening at $14 and share prices initially rose, only to crash while the company was forced to declare another bankruptcy that listed $2.06 billion in assets and more than $1.74 billion in liabilities. Nasdaq delisted TRMP in February 2009 when its stock was trading for pennies per share.

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Why It Happened: Much of the blame on Trump’s failure as the head of a publicly traded company has been placed solely on Trump’s desk. He was accused of profiting substantially while his company was failing — he pocketed a $1.5-million salary when the company filed for its 2004 bankruptcy — and he never truly adapted to the structure of a publicly traded entity, freely admitting he was not comfortable answering to his board of directors.

He also sent the investment community bizarre messages that seemed out of touch with reality, particularly after the 2004 bankruptcy, when he told a reporter, “I don’t think it’s a failure. It’s a success. The future looks very good.”

With the 2009 bankruptcy, Trump resigned from the company. His daughter Ivanka, whom he appointed to the board of directors two years earlier, also resigned. Trump insisted that he had other activities that demanded his attention.

“The company has represented for quite some time substantially less than 1% of my net worth, and my investment in it is worthless to me now,” he said.

The company dribbled on without Trump’s presence through 2014, when it declared bankruptcy again; the Trump Plaza Hotel closed that year. The company emerged from bankruptcy in February 2016 with Carl Icahn as its owner.

Photo: Gage Skidmore/Flickr Creative Commons.