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Bankruptcy Judge Approves Interim Financing Plan for
  Trump Hotels & Casino Resorts Inc.; Judge Urges a
 Committee of Shareholders be Formed
 to Scrutinize the Deal

By Suzette Parmley, The Philadelphia Inquirer
Knight Ridder/Tribune Business News

Dec. 16, 2004 - A bankruptcy judge in Camden approved an interim financing plan by Trump Hotels & Casino Resorts Inc. yesterday, allowing the company to continue operations and work to refinance $1.8 billion in debt.

But as a condition of her approval, U.S. Bankruptcy Court Judge Judith H. Wizmur urged an official committee of shareholders be formed to scrutinize the refinancing plan and raise any objections up through Dec. 31.

"It is understood this is not a unanimous, consensual agreement," Wizmur said.

Trump Hotels, the company that runs Donald J. Trump's casino properties in Atlantic City, filed a 300-page document with the court yesterday outlining its recapitalization plan. It filed for Chapter 11 protection on Nov. 21.

Under the plan announced in late October, bondholders would own 63 percent to 65 percent of the company. They would exchange their debt for $74 million in cash, $395 million in common stock and $1.25 billion in new notes. More than half of the bondholders have already signed agreements supporting the plan.

The plan includes a reverse stock split through which common shareholders would receive one share of the reorganized company for every thousand shares they currently own.

Trump Hotels shares yesterday closed at $1.48, up 1 cent.

Morgan Stanley, the investment banking firm, would be the lender and provide a $500 million line of credit for Trump to overhaul his three Atlantic City casinos and expand into other locales, including Pennsylvania. Another lender, Beal Bank, will provide $100 million in interim financing.

Trump, who will invest $55 million under the plan, would remain chairman and chief executive officer of the newly reorganized company, and make $2 million a year once the company exits Chapter 11. Morgan Stanley would control the use of his name for the gambling operations. Trump's ownership stake would be reduced from 56 percent to 27 percent.

Trump will also get ownership of the former Trump World's Fair casino site in Atlantic City, and Trump Hotels' 25 percent interest in the Miss Universe L.P. competition. Both assets are valued at a total of about $35 million. Trump demolished the World's Fair casino in 1999 when he planned to build a new casino resort on the Boardwalk.

Executives of Trump Hotels have blamed high interest payments on junk bonds used to finance the Trump Taj Mahal, a $1 billion Atlantic City casino that opened in 1990, for weakening its financial condition to the point where it has been unable to improve its properties.

Besides the Trump Taj Mahal, Trump owns Trump Plaza and the Trump Marina. Collectively, the casinos, which employ more than 8,000, have not turned a profit since 1995.

At the Nov. 22 hearing, Wizmur granted conditional permission for Trump Hotels to tap the $100 million debtor-in-possession loan from Beal Bank, and to continue using cash in its coffers to operate Trump's Atlantic City casinos.

Scott C. Butera, president and chief operating officer of Trump Hotels, said the company has used $35 million of the money to pay trade creditors and vendors.

Butera said the company wants to add a hotel tower to the Trump Taj Mahal and upgrade the other casinos.

"We are very pleased with the way the case is going and we hope to get the plan approved soon," he said. "This plan puts us on track to exit some time in March."

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