October 21
In order to reduce
its debt by $400
million, Donald Trump's
Trump Hotels & Casino
Resorts Inc. announced
it will request Chapter
11 bankruptcy protection
as part of an agreement
it wants to make with
its bondholders.
In the request,
Trump's company
announced that
bondholders would trade
the $400 million in debt
for $74 million in cash,
$1.25 billion in new
debt with a reported
interest rate of 8.5%,
and $395 million in
common stock.
The bankruptcy would
alleviate the burden of
debt after a failed
attempt by Trump to
invest $400 million
himself, along with
backing from Credit
Suisse First Boston last
month. Trump Hotels and
Casino Resorts Inc.
hasn't turned a profit
for nearly nine years,
and it doesn't have the
cash on hand to reinvest
in the three casinos it
owns in Atlantic City,
where competition is
fierce.
It is reported that
Donald Trump will keep
his positions with this
new deal. He will invest
around $71.4 million
into the reorganized
company by changing
$16.4 million of company
bonds he possesses into
common stock and
purchasing $55 million
in equity with cash
money.
Last month, Trump
remarked about the
failure of the Credit
Suisse First Boston deal
by announcing that he
was thinking of making
the company private.
Trump first exposed
plans to refinance the
debt with Credit
Suisse's own DLJ
Merchant Banking
Partners III LP back in
February.
The company announced
back in August that it
would try for Chapter 11
protection as part of
the proposed agreement
and cut its debt by $544
million. Bond investors
holding $425 million of
the company's debt last
month wanted better
terms than the 95.6
cents on the dollar the
company was offering.
Without the compromise,
the first deal fell
through.
