Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, June 12, 1990 TAG: 9006120399
SECTION: BUSINESS PAGE: A-3 EDITION: EVENING
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
The proposal, worked out over the weekend, also would let Trump suspend interest payments on $2 billion in outstanding bank debt, said the sources, speaking on condition of anonymity.
In exchange, Trump has pledged as collateral some of his remaining real estate and casino assets that aren't otherwise committed to secure loans. Those assets include the Trump Plaza Hotel in Atlantic City, N.J., and the Trump Tower building in Manhattan, one source said.
Trump also may have agreed to forfeit equity in other properties in return for the suspension of interest payments, and to make changes in his lavish, high-profile lifestyle, according to a report in Monday's Wall Street Journal, which first reported the tentative bank deal.
But the Journal article said Trump balked at a bank proposal to secure the $60 million loan with the apartment portfolio of his father, Fred Trump, who also amassed a fortune in real estate and first taught the younger Trump the art of the deal.
The New York Times said the developer is trying to sell most of his smaller, high-profile assets, including planes and helicopters, as well as a stake of up to 49 percent in one of his major real estate or casino assets in an effort to ease his cash problems. The Times quoted unnamed bankers and a person close to Trump's negotiators.
One source familiar with the negotiations said major banks' contributions toward the $60 million loan will be proportionate to the amount they had lent previously. Citicorp and Bankers Trust would provide about two-thirds.
Sources say the next step is to sell the restructuring plan to smaller creditors, including Japanese banks, which reportedly bought part of Trump's loans through syndication.
Trump's biggest bank creditors - including units of Chase Manhattan Corp. and Manufacturers Hanover Corp., in addition to Citicorp and Bankers Trust - were expected to meet Monday with about 10 additional banks, sources said.
"If any one of the other banks do not go along, then the deal does not work," the Journal quoted an unidentified banker as saying.
Neither the banks nor Trump would comment officially on the reported deal.
"When an agreement is reached we'll probably release a statement," said Thomas Parisi, a Bankers Trust spokesman.
Trump Organization spokesman Daniel Klores said, "We'll make no comment while negotiations are going on."
The flamboyant developer, whose marital and financial troubles have been the subject of media scrutiny, confirmed last week that he was negotiating with major banks to restructure his debt.
The banks reportedly were concerned that Trump may not be able to handle the billions in debts he ran up buying big real estate and casino properties, given the current slowdown in both industries.
The huge Trump Taj Mahal in Atlantic City has been a drain on his cash flow, as have interest payments on bonds he issued to finance the purchase of hotels and the Trump Shuttle airline.
The purpose of the debt plan is to give Trump time to restructure his operations while he waits out New York City's real estate slump and the downturn in the Atlantic City gambling market.
Without the extra breathing room, Trump could be forced to sell some of his major assets at bargain prices.
If the smaller creditors support the proposal, Trump likely would be able to meet an interest payment due Friday on the bonds for Trump's Castle casino.
Trump has not missed any payments. But according to the Journal, some bankers were concerned that missing a payment would jeopardize the gambling licenses for all three of Trump's casinos - Trump Plaza, the Taj Mahal and Trump's Castle.
The news of Trump's cash problems caused prices of high-yield junk bonds used to finance part of the developer's empire to tumble last week, with some issues trading as low as 60 percent of face value.
But following reports of a tentative bank deal Monday, the bonds, including issues tied to the Taj Mahal and Trump Castle, traded up by as much as $40 per $1,000 face value before settling a bit lower.
by CNB