Real estate and casino mogul Donald J. Trump worked out a vital restructuring deal on one of his casinos Sunday, but the agreement forces him to give up more control over his empire, a source close to him said.
Facing a deadline of today, Trump held weekend talks with creditors at his Trump Castle Casino in Atlantic City to restructure his debt. He needed cash to make a $41-million payment on the $351.8 million in bonds outstanding.
"Everything is all set; we've worked a deal on the Castle," the source said.
He would not give details of the agreement but said it was similar to the debt-for-equity swap worked out in April for Trump's massive Taj Mahal casino complex in Atlantic City, the resort's largest.
In that deal, Trump persuaded his lenders to take a 50% share of the casino/hotel in exchange for bonds, forcing him to give up control of one of his flagship properties.
On Friday, Trump made a $16.5-million payment on the Trump Plaza Casino with cash from casino operations.
Trump is also facing a hearing by the New Jersey Casino Control Commission today to determine if he is financially fit to run his three Atlantic City casinos, which include the Trump Plaza.
Faced with massive debts and increasing cash-flow problems, Trump has been forced to get rid of large chunks of his empire to stay afloat.
Among properties he is ceding to creditors are his 282-foot Trump Princess yacht, a 49% stake in New York's Grand Hyatt Hotel, the Trump Shuttle airline and his 27% stake in Alexanders Inc., a department store chain.
He is keeping a valuable parcel of land on the West Side of Manhattan where a development is planned and New York's luxury Plaza Hotel, which he wants to convert to a condominium. He also has other New York property holdings, mainly apartment buildings in Manhattan.
Many of his holdings were bought with borrowed funds, personally guaranteed by Trump. Now his bankers want the assets in exchange for his debts.
In the spring, the casino commission renewed Trump's licenses for the Trump Castle, Trump Plaza and Taj Mahal casinos on the condition that the developer clean up his debt by June 17.
They ordered Trump to rework his debts and make his casino interest payments if he wants to keep the licenses on his gaming properties.
The casino hearings could last through the week. The commission usually makes its decision a few days after they close. "We will not take long," a commission spokesman said last week.