P.M. BRIEFING : Merv Griffin Resorts International Halts Interest Pay to Bondholders
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ATLANTIC CITY, N.J. — Debt-ridden Resorts International Inc. and its subsidiaries have stopped paying interest to its bondholders, company officials announced today.
“It has become clear that Resorts is a much bigger challenge than we anticipated,” said company owner and Chairman Merv Griffin in a news release.
In a separate letter to bondholders dated today, the entertainer explained that cash flow has been less than originally anticipated, “in part because we underestimated the time and capital expenditures it would take to turn around the company’s operations to generate increased profits.”
Griffin, who purchased the company from developer Donald Trump in November, wrote that it has taken Resorts longer than expected to sell “non-operating real estate assets.”
Resorts, based in Atlantic City, faced payments of more than $130 million in interest and principle this year, but its operations will not likely generate enough money to cover that. In 1988, the company’s cash flow was $60.2 million.
The moratorium will be in place indefinitely, pending an agreement with the company’s bondholders on a recapitalization of the company, according to a statement issued by the company.
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