...Trump Entertainment Resorts (NASDAQ NMS: TRMP). The casino company cannot seem to get out from a mountain of debt that has prevented it from ever turning a profit.

Back in March, Trump Entertainment Resorts announced the engagement of Merrill Lynch to assist the Company in the identification and evaluation of strategic corporate options. The Board of Directors of the Company has now created a Strategic Committee to evaluate the Company’s options and to work with Merrill Lynch on these matters. The Strategic Committee has retained Kirkland & Ellis LLP as its legal advisors.

Already the Strategic Committee has recently received preliminary and conditional indications of interest from parties proposing to acquire the Company. Last Friday, Trump Entertainment Resorts announced that there can be no assurance that any of these indications of interest will result in a sale of the Company or any other transactions, however, analysts are starting to speculate the party is over for the sagging casino company.

Trump operates three Atlantic City casinos all located in Atlantic City: Trump Plaza, Trump Taj Mahal and Trump Marina. Several years ago he shuttered the failing Trump World’s Fair Casino, which has since been demolished. Trump Plaza and Trump Marina are usually the worst performers in pulling in revenue and are 10th and 11th in revenue of the 11 casino resorts in the City by the Sea.

While Donald Trump is chairman of the company, he is not involved in the day to day operations of the company. He was removed from that position nearly three years ago when the company’s severe financial troubles sent it into bankruptcy. Trump Entertainment filed for Chapter 11 bankruptcy protection in November 2004 when the company couldn’t make payments on its $1.8 billion in debt. It had also sought bankruptcy protection several years before that.

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Trump is still the company’s single largest stockholder. Its current leadership has managed to restructure the company’s debt to improve cash flow by reducing debt by nearly $600 million, but it’s still not pulling in enough revenue to be in the black.
Trump properties have consistently lost money, an aberration for the country’s second largest casino market. Additionally, Atlantic City has been experiencing a renaissance and until a couple of months ago was constantly posting month over month revenue record increases. However, now the market is getting pinched from the emerging Pennsylvania gaming scene and new casinos in New York.

"They face the same problem, ironically, that they faced three years ago, in that they require more capital than they have to turn around the company," Andrew Zarnett of Deutsche Bank AG in New York told the Philadelphia Inquirer.

According to an analyst’s letter from Bear Sterns, they believe the company will be sold to a private equity firm. “Our sense is that fair value for TRMP is roughly $16 but we note an acquisition could fetch a slight premium to our fair value assessment,” said the note.

Bear Sterns believes a fair value for the company is based on estimated 2008 EBITDA, capitalized with target multiples of 8.0x and 8.5x, less 2007 net debt adjusted for construction in progress, plus a value adjustment for excess, non-EBITDA-producing land in Atlantic City.

If sold, it’s possible only the Taj Mahal would survive in its present form as Trump Marina and Trump Plaza are considered outdated infrastructure.

“Most comments heard from other (casino) operators about the Plaza and the Marina are that they are attractive redevelopment opportunities. In other words, they are likely tear-downs and rebuilds,” analyst Adam Steinberg of Morgan Joseph & Co. Inc. wrote in a note to investors.

Trump shares had fallen more than 40 percent this year, but were buoyed last week by about 20 percent now that a sale seems imminent.

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