Trump Fails to Pay $18 Million in Interest Due

Donald Trump, deeply involved in bank talks to stave off a looming cash crisis at his real estate empire, failed to pay an estimated $18 million in interest due to bondholders today.

The real estate and casino developer who soared to financial fame in the 1980s missed the interest payment on two series of junk bonds issued on Trump Castle, the least profitable of his three Atlantic City, N.J., casinos.

But the Trump Organization--the group that oversees a multibillion-dollar empire stretching from Palm Beach, Fla., to New York’s Fifth Avenue--said it made a $16-million payment on the bonds from Trump Plaza, a second casino property it owns.

Trump has been in marathon talks with his bankers about the need to raise cash, but financial analysts had predicted that he would not run into payment problems so soon.

His major banks have agreed to lend him $60 million, expected to be used to tide him over until he is able to shed some assets. But some smaller banks in the lending group are apparently balking at the plan.

Junk bonds of Trump Castle tumbled on the news. Trump Castle bonds fell $80 per $1,000 face amount to $500, effectively trading at just 50 cents on the dollar.

Trump’s recently acquired properties, like the Plaza Hotel in New York and Trump Shuttle airline, have been losing money after making interest payments. His Atlantic City, N.J., casinos have also been competing with a host of other betting establishments in the crowded marketplace.

In addition to the Castle and Plaza casinos, Trump recently opened the glitzy Taj Mahal casino in Atlantic City, sparking concerns that his operations would not generate enough cash to meet his massive debt payments.

Analysts said the Trump Organization now has a 10- to 30-day grace period to make its interest payments on the two debt issues before the company would officially be in default, threatening Trump’s casino licenses in Atlantic City.