Trump Is Racing Against Time on Bonds
Donald J. Trump was racing to clinch a deal with bankers before a crucial $25-million casino bond payment comes due next week, sources said Wednesday as Trump casino executives prepared to meet the press today in Atlantic City, N.J.
“It comes down to what bank is willing to put up new money to pay the bonds to get over this cash squeeze,” a banker familiar with the negotiations said. The June 15 payment involves interest and principal on bonds issued to finance the Trump Castle, one of Trump’s three casino-hotels. “The issue now is a prominent one in the minds of everyone. The bank has to believe he will be around for a while.”
Meanwhile, Trump’s wife, Ivana, whose split with the millionaire helped set off an avalanche of bad publicity in recent months, indicated Wednesday that even if the bankers’ confidence has been shaken, hers has not.
“Donald and I are partners in marriage and in business,” Ivana said in a statement issued through her lawyer, Michael Kennedy. “I will stand beside him through thick and thin and for better or worse.” Ivana filed suit in April seeking to overturn a prenuptial agreement that would limit a divorce settlement to about $25 million. The suit also lays claim to half of Trump’s wealth.
Also Wednesday, a source said Trump is close to signing a new tenant to fill the former Bonwit Teller site at Trump Tower in Manhattan, helping ensure that he will not have problems meeting mortgage payments on that property. The prospective tenant is leading French retailer Galeries Lafayette, considered the Bloomingdale’s of Paris. Galeries Lafayette would provide a symbolic boost and a higher rent than Bonwit’s, which filed for bankruptcy protection last summer.
Galeries Lafayette officials couldn’t be reached for comment.
The head of Trump’s operations in Atlantic City, Ed Tracy, is holding a news conference this morning at the lavish Taj Mahal casino hotel to answer the recent wave of negative news and rumors concerning Trump’s casino holdings. The Taj has delayed payments of tens of millions of dollars to contractors and laid off hundreds of employees. Rumors have spread that as many as another 2,000 layoffs are on the way.
The $1.1 billion Taj, although breaking Atlantic City records for gambling revenue, has failed to live up to some analysts’ estimates of what is needed for the costly operation to break even. The opening of the Taj in April also has lured gamblers from the Castle.
Trump was accused of fraud in a lawsuit filed Tuesday in federal court by investors who want to hold him responsible for the plunging value of the bonds he sold to finance Trump Plaza, as well as the dropping value of Trump’s Castle casino bonds.
The news conference--which comes after several days of virtual silence from the Trump Organization--and the attempts to ensure the bond payment are designed in part to stem the erosion of confidence in the one-time high-flying deal-maker.
Bankers continued meeting with Trump representatives, including longtime Trump personal attorney Gerald Schrager, on the 26th floor of Trump Tower. The major banks include Citibank, which has the biggest share of Trump loans, Bankers Trust, Manufacturers Hanover and Chase Manhattan.
Eventually, Trump may have to sell off properties to shore up his poor cash flow. There may not be enough time to do that before next week’s payment, but it’s unlikely that Trump’s lenders would place him in default.
“If a default occurs there would be a terrific crisis in public confidence, which would hurt all lenders,” one bankruptcy expert said. “It could have a negative impact on Trump’s ability to restructure.”
In exchange for a new loan, the banks may take an equity position in Trump properties, sources said.
In another development, Alexander’s Inc.--in which Trump holds a 27.2% stake--acknowledged that it hasn’t received any offers since it was put up for sale last December.
Trump has lost more than $5.7 million on his Alexander’s stock, not including the cost of loans to make his purchases, based on Wednesday’s closing price of $46 a share.
