Trump, Reportedly Strapped, Talks to Creditors : Real estate: Some of the investor’s major lenders are seeking a restructuring of his holdings. He denies that he’s in trouble.

Donald J. Trump, the flamboyant New York real estate magnate who built an empire through “The Art of the Deal”--and wrote a book by the same name--is now applying his negotiating skills to the mountain of bank debt that he amassed in the process.

The Trump Organization, the developer’s principal holding company, said Monday that it is talking with its major bank creditors. The admission came amid reports that Trump was facing a critical cash shortage.

Prices for junk bonds used to finance Trump’s Atlantic City, N.J., casino projects plunged Monday as investors soured on the investments.

The selloff began after the Wall Street Journal reported that Trump has met with lenders who have grown increasingly uneasy about his reported $2 billion in bank debt. They are seeking a restructuring of the developer’s holdings, including a possible sale of some Trump assets.

The Journal said Trump’s lenders have grown concerned that his holdings, including his three Atlantic City casinos, are not generating enough cash to meet payments. The report said they had begun meeting with Trump and his aides two weeks ago.

Trump issued a terse but upbeat statement in response to the story, confirming the talks but calling them “cooperative and constructive.”

Calls to Trump’s office were referred to his spokesman, Howard J. Rubenstein, who refused to give any information about the negotiations.

The construction manager for Trump’s Taj Mahal Casino in Atlantic City said Monday that Trump is in arrears on more than $50 million in contractors’ bills for the project.

The last time that Trump paid anything to his construction manager, who is still owed $1.6 million, was “sometime in March,” said Craig Miner, a spokesman for the company, Perini Corp. of Framingham, Mass.

Miner said he could not disclose how long it has been since the subcontractors--who represent the bulk of the delinquent debt--were paid by Trump.

Perini, which started managing the job for Trump after the previous manager was dismissed, is holding “ongoing meetings with them to work out a payment schedule,” Miner said. His company has not been asked to take any cuts, he added.

Other developments Monday further eroded Trump’s image as a self-made American success story.

In recent months, the developer, while maintaining that he wasn’t having cash flow problems, has said he was considering putting some of his assets on the block. He said they included the Northeast air shuttle, which he bought from Eastern Airlines for $365 million last year. Trump said he wanted the cash to buy new properties.

Trump’s assets include the Plaza Hotel, Trump Tower skyscraper and several apartment buildings in Manhattan; the casinos, including the recently opened $1-billion Taj Mahal, Trump Plaza and Trump Castle, and the Trump Shuttle.

The Journal said Monday that some of the planned sales had fallen through or been put on hold. For example, the developer’s plan to sell his Trump Princess yacht for $115 million to Japanese investors failed, the Journal said, quoting people familiar with the talks.

Trump’s lenders are likely concerned because of a downturn in the real estate market. Furthermore, the Taj Mahal, which opened two months ago, apparently has not flourished amid the plethora of casinos in Atlantic City.

Mike Mulvaney, who follows the Taj Mahal and Trump Plaza casinos for Moody’s Investors Service, said he had reports that the Taj Mahal “has not been operating to its fullest potential.” The Trump Plaza was faring somewhat better, he said.

The Journal said the big banks also were concerned that if Trump does sell assets, he might not be able to get the kind of prices that he maintains they are worth.

In his statement Monday, Trump continued to talk up the worth of his holdings. “They are unique, well positioned and they have great long-term value,” he said.

The junk bond market was not reassured by Trump’s assertions.

Trump Taj Mahal 14% bonds were down $10, being quoted at $56 to $58 per $100 in face value in late afternoon. Trump Plaza 12.875% bonds were down $4 and quoted at $82-$83, while Trump Castle 13.75% issues were off $10 and quoted at $59-$61.