Breaking Down Trump’s Options to Pay $454M Civil-Fraud Penalty | WSJ

- [Narrator] Donald Trump

is facing half a billion dollars in legal penalties,

an amount that's growing by tens

of thousands every day.

The judgment in his New York civil-fraud trial represents

one of the biggest tests

of the former President's personal wealth in decades.

- He is probably gonna have to liquidate assets,

and I think it is gonna put tremendous pressure

on the Trump organization,

and there's a risk that it all begins

to cascade.

- [Narrator] And he's up against the clock.

For now, he has until late March to come up with the funds.

Otherwise, the New York Attorney General could begin

to seize some of his assets.

On March 18th,

Trump's lawyer said he has been unable to obtain a bond

to guarantee payment despite negotiating with some

of the largest charterers in the world.

So what options does Trump have

to finance this mounting bill?

We asked Wall Street Journal editor Peter Grant

to break down where

the former President's wealth stands today.

- We've looked at his business for a long time

and our best guess is that his net worth today

is roughly around $3 billion.

Trump is under a lot of stress right now,

but it doesn't compare with the kind of stress

that he's facing during the recession of the early '90s.

- In 1975, we had a recession,

but that was a picnic compared to this.

That was an absolute picnic.

- Just before that recession,

he was a lot more ambitious in terms of his business goals

and he was buying assets right and left.

- We got it out on time for you folks.

So we're gonna really be a good competitor

and I think it's gonna be a lot of fun.

- When the recession of the early 1990s hit,

he couldn't pay his debts and his empire began to crumble.

He had to sell a lot of these assets,

but even more he had to put some

of his casinos in Atlantic City into bankruptcy.

He himself was on the brink of personal bankruptcy.

- [Narrator] Trump managed to survive the recession,

and then changed his tactics.

- He started to leverage more his name, his brand.

He would sell his brand to developers

who would be building projects.

They put the Trump name on it,

but Trump wouldn't have the risk.

One of the things that Trump has done

to shore up his balance sheet in recent years

is sell assets.

Trump has numerous assets throughout the world.

They're primarily in the US, the ones he owns.

He owns resorts, condos, hotels,

and he has pretty big stakes in some big office buildings.

The Trump balance sheet today

is much stronger than it used to be.

It has roughly $400 million of cash on it,

and he's deleveraged by about $300 million,

which puts him in the position

of increasing leverage if he needs fast cash.

- Those cash reserves are now in question

as his legal troubles mount.

On February 16th,

a New York judge ordered Trump

to pay $355 million in penalties,

plus another $100 million in interest, which will continue

to grow by roughly $100,000 per day.

This comes after the judge found the former President

fraudulently valued parts of his real estate empire

to secure more favorable loans.

- The cases a complete and total sham. It's a sham case.

- There's a liquidity problem fundamental to all of this.

The likelihood that somebody

has $450 million sitting around just is not possible.

- [Narrator] Trump appealed the ruling,

but for it to move forward, he must secure the financing

for what might be the full amount of his penalty.

In late February,

an appeals judge rejected an offer from Trump's lawyers

to post a $100 million bond, rather than the full amount.

That decision is under review by a panel

of appellate judges.

Trump doesn't have too many options.

He could put up the entire amount in cash,

but doing that isn't easy.

- He can't deplete all his cash.

He needs a significant amount of cash to pay the bills,

so he can't use all $400 million.

- [Narrator] On the other hand, Trump could secure a bond

that would guarantee payment if he were to lose his appeal.

They're typically backed by cash, investments,

or other assets.

- He could potentially borrow against those assets,

come up with the cash, and just use that cash for the bond.

- [Narrator] The fees a company might charge

for the bond could also prove costly.

- It's like any other instance in which you're securing

a line of credit of sorts, right, which is,

there's gonna be a negotiation

over what they're gonna charge you for this.

So I don't think anybody thinks this

is gonna be an inexpensive bond.

- [Narrator] Trump has until late March to post a bond.

But in a filing to a New York Appeals Court on March 18th,

his lawyer said he has faced insurmountable difficulties,

and that a bond in a judgment's full amount

is a practical impossibility.

- We will seek judgment enforcement mechanisms in court,

and we will ask the judge to seize his assets.

- The AG has no interest in keeping it quiet.

I think there is no question that if Trump is unable

to secure the kind of undertaking that will allow him

to stay the proceeding, this is game on for her.

- [Narrator] Trump's lawyers have acknowledged

he lacks the liquidity

to cover the judgment.

If the court doesn't intervene, they said

that he might be forced to unload

his prized real estate in a fire sale.

- He has three ways

to pay off the judgment without selling assets.

One would be through the available cash.

Two would be borrowing against the assets,

and three would be borrowing money from friends.

The worst case scenario would be for him

to start selling assets.

He'd have to sell them quickly.

Buyers would have the potential

of taking advantage of the situation,

and he wouldn't get the kind of prices

that he would hope for.

So that would be a certainly a bad scenario for him.

- Even though some of these properties may be viewed

as iconic properties, they may be worth a lot of money,

there aren't a lot of people who are willing

to spend that kind of money.

- [Narrator] A spokesperson for Trump

did not respond to questions

over how he plans to finance the judgment.

His lawyer said in the March 18th court filing

that obtaining cash through a fire sale

of his real estate would result in irrecoverable losses.

Trump cleared one financial hurdle

for a separate case on March 8th when he secured

a nearly $92 million bond to guarantee

a defamation judgment he owes

to writer E. Jean Carroll.

In the meantime, Trump's legal team

has been focused on its appeal efforts.

It's possible those proceedings could last a year or more.

- Worry he'd win the appeal.

And in this instance,

let's assume win means the entire conviction is vacated,

then none of this matters.

The only thing he would actually be out at this point

other than legal fees, would be the cost of the bond.

The other piece that you always have

to remember is these numbers aren't ever going down.

They're going up and up and up,

and they will continue to go up

until the appeal is exhausted.

So, assuming Donald Trump does not win on appeal,

the number that we're gonna see at the end

of this is gonna be significantly larger

than the number we see now.

And again, we're gonna be right back here

where we are today.