Trump Says He’s ‘Very Close’ to $65-Million Loan Package
Breaking a weeklong silence, flamboyant developer Donald J. Trump said late Friday afternoon that his lenders were “very close” to approving a new loan package that likely will keep his creditors at bay for the time being.
A banker close to the talks said Dresdner Bank, a major West German financial institution, is the lone holdout preventing consummation of the agreement. Several Japanese banks tentatively agreed Friday to go along, he said.
The news Friday represented a significant step forward in marathon negotiations that have been going on in New York City for more than three weeks and have at times gone on around the clock.
If an agreement is approved, a group of seven New York and New Jersey banks would loan Trump another $65 million, most of which would come from Citibank and Bankers Trust. The interest payments on Trump’s present bank loans would be suspended temporarily.
Trump last week skipped a $42.6-million payment of principal and interest on the bonds of his Trump Castle casino-hotel in Atlantic City, N.J., and now faces a formal default if the money is not paid by midnight Tuesday.
Trump issued the bonds in 1985 in an offering that raised $300 million and allowed him to buy the property from Hilton Hotels, which had been denied a gambling license at the 11th hour because casino regulators objected to some of Hilton’s business ties.
Trump currently has about $2 billion in bank loans and another $1.3 billion in long-term bond debt, but he is in a cash squeeze that has prevented him from making the interest payments on much of that debt.
The current loan negotiations are expected to continue into the weekend and center around a $75-million first mortgage on Trump Tower, one of the developer’s showpiece properties in Manhattan. Chase Manhattan is the lead lender on Trump Tower, with Dresdner and three major Japanese banks as co-equal participants.
Dresdner Bank officials are reportedly balking at placing a second mortgage on Trump Tower as collateral for some of the developer’s other lenders. “They want to be bought out,” the banker said, referring to Dresdner. “They’re playing hardball.”
In a statement Friday, Trump said he was “confident” that an agreement would be reached with what he termed the “handful of remaining banks.” He was not available for further comment.
The Japanese banks that fell in line Friday were said to be Mitsubishi Trust & Banking, Sumitomo and Dai-Ichi Kangyo. Each of the foreign lenders is believed to have a $15-million piece of the loan package, with Chase having the remaining $15 million.
Dresdner Bank executives were not available for comment. Based in Frankfurt, it is West Germany’s second-largest commercial bank.
Even if Trump gets his new loans, a growing number of real estate and gambling experts on the East Coast question whether he will be able to survive in the long run. His cash squeeze stems from a depressed real estate market in Manhattan and a slowdown in gambling revenue in Atlantic City, where he owns three large casino-hotels.
Already there are serious concerns about whether Trump will be able to make the interest payments on the bonds for the Taj Mahal, his newest casino in the New Jersey resort town, when they come due in November.
