DJTC- Best news article describing the new plan.
Trump Hotels & Casino Resorts and Donald J. Trump Announce Comprehensive Recapitalization Plan; Plan Supported by Overwhelming Majority of Bondholders Company Positioned to Capitalize on World-Renowned Trump Brand and Become Major Player in Gaming In
NEW YORK, Oct 21, 2004 (BUSINESS WIRE) -- Trump Hotels & Casino Resorts, Inc.
("THCR" or the "Company") (OTCBB: DJTC.OB) announced today that the Company,
Donald J. Trump and holders of approximately 57% of Trump Atlantic City
Associates' First Mortgage Notes due 2006 (the "TAC Notes"), approximately 68%
of Trump Casino Holdings, LLC's First Priority Mortgage Notes due 2010 (the "TCH
First Priority Notes") and approximately 81% of Trump Casino Holdings, LLC's
Second Priority Notes due 2010 (the "TCH Second Priority Notes," and together
with the TCH First Priority Notes, the "TCH Notes") have entered into a support
agreement (the "Support Agreement") in connection with the recapitalization of
the Company pursuant to a plan of reorganization (the "Plan"). As part of the
Plan, Donald J. Trump, who will remain the Company's Chairman and Chief
Executive Officer, will invest approximately $71.4 million into the
recapitalized Company. Mr. Trump's investment will consist of a $55 million cash
equity investment and the conversion of approximately $16.4 million principal
amount of TCH Second Priority Notes owned by him into shares of the
recapitalized Company's common stock. Upon consummation of the Plan, Mr. Trump
is expected to remain the largest individual stockholder of the Company, with
beneficial ownership of approximately 27% of the Company's common stock.
The Plan calls for an approximately $400 million reduction in the Company's
indebtedness with a reduced interest rate of 8.5%, representing annual interest
expense savings of approximately $98 million. The Plan also permits a working
capital facility of up to $500 million secured by a first priority lien on
substantially all of the Company's assets (the "Working Capital Facility"),
which is expected to allow the Company to refurbish and expand its current
properties and permit the Company to enter into new and emerging jurisdictions,
among other uses.
Donald J. Trump, the Company's Chief Executive Officer and Chairman, commented
on the Plan, "I have never been more excited about the prospects for our
Company. We now have the capacity to significantly expand the Trump brand into
the ever-evolving gaming industry. I anticipate THCR achieving the same level of
success as my other business and real estate endeavors." Scott C. Butera, the
Company's Executive Vice President of Corporate and Strategic Development,
added, "We are very pleased that we have come to a mutually beneficial agreement
with our bondholders which successfully achieves our financial and strategic
objectives and provides significant value to our stakeholders. In addition, we
have developed strong working relationships with many institutional investors
who we hope will continue to support the growth of our operations and brand. We
are now positioned to capitalize on the numerous opportunities present in
today's gaming and entertainment industry." Mr. Butera continued, "The proposed
capital structure streamlines our organization and is expected to provide for
increased operational efficiencies and financial flexibility. It will also make
our Company easier to understand to the public and investment community."
Under the Plan, the holders of the TAC Notes and the unaffiliated holders of the
TCH Notes would exchange their notes (approximately $1.8 billion aggregate
principal amount) for an aggregate of approximately $74 million in cash, an
aggregate of $1.25 billion principal amount of a new series of 8.5% senior
second priority mortgage notes with a ten-year maturity and secured by a lien on
substantially all of the Company's assets, subject to the Working Capital
Facility (the "New Notes"), and approximately $395 million of common stock of
the Company valued at the same per share purchase price as Mr. Trump's
investment (assuming the unaffiliated stockholders of the Company fully exercise
the warrants discussed below).
Existing unaffiliated stockholders of the Company would retain their interests
in their current common stock (which would be diluted to 0.05% of the total
equity interests of the recapitalized Company and are expected to be
reclassified pursuant to a reverse stock split upon consummation of the Plan).
The existing unaffiliated stockholders would also receive one-year warrants upon
consummation of the Plan to purchase common stock at the same per share purchase
price as Mr. Trump's investment. Proceeds from the exercise of the warrants (as
well as any remaining shares of the $50 million of the Company's common stock
reserved for warrant exercises, if not all of the warrants are exercised) would
be distributed to the holders of the TAC Notes. If all of the warrants are
exercised, the Company's unaffiliated stockholders would hold approximately 8.3%
of the Company's common stock, the holders of TAC Notes would hold approximately
63.7% of the Company's common stock and the holders of the TCH First Priority
Notes would hold approximately 1.4% of the Company's common stock, each on a
fully-diluted basis.
Houlihan Lokey Howard & Zukin has been serving as the financial advisor to the
TAC Noteholders involved in the discussions. David R. Hilty, Managing Director
in the Financial Restructuring Group of Houlihan Lokey Howard & Zukin,
commented, "This recapitalization puts the Company in a strong financial
position with immediate access to significant capital. The TAC Noteholders are
enthusiastic to be teaming up with Mr. Trump and to capitalize on the many
opportunities generated by the Trump brand."
Chanin Capital Partners has been serving as the financial advisor to the TCH
Noteholders involved in the discussions. "We are pleased that the Company has
reached a consensual recapitalization with such a large percentage of its
stakeholders. The transaction will position THCR for future growth and
expansion," stated Russell A. Belinsky, Senior Managing Director of Chanin
Capital Partners.
Upon consummation of the Plan, the Company is expected to transfer to Mr. Trump
the former Trump's World's Fair site in Atlantic City, New Jersey and the
Company's 25% interest in the Miss Universe pageant. The Company would also
enter into a development agreement with the Trump Organization, pursuant to
which the Trump Organization would have a right of first offer to serve as
project manager, construction manager and/or general contractor with respect to
construction and development projects for casinos and casino hotels and related
lodging at the Company's existing and future properties. Mr. Trump has also
agreed to grant the Company and its subsidiaries a new trademark license
agreement for use of his name and likeness as well as enter into a services
agreement with the Company.
The Support Agreement contemplates that the Company would commence
reorganization proceedings by late November 2004 and that the Plan would be
confirmed by mid-April 2005 and consummated by May 1, 2005. The Company intends
to arrange for up to $100 million interim financing during the proceedings.
Gregg H. Feinstein, Director of Mergers & Acquisitions at Jefferies & Company,
who advised the Special Committee of independent Directors of the Company's
Board of Directors, noted, "This transaction is the culmination of a significant
effort on the part of many constituencies. The public stockholders will have a
compelling opportunity to share in the value which the Company believes will be
generated going forward."
The implementation of the Plan is subject to a number of conditions typical in
similar transactions including, among other things, the negotiation of the
investment agreement and other documentation relating to the Company's
arrangements with Donald J. Trump, the Plan and accompanying disclosure
statement, the indenture governing the New Notes and other transaction
documents. The Plan would also be subject to applicable government approvals,
including court approval of the Plan and related solicitation materials, gaming
authority approvals and other relevant filings. The definitive terms and
conditions of the Plan would be outlined in a disclosure statement that would be
sent to security holders entitled to vote on the Plan after confirmation by the
court.
UBS Investment Bank has been serving as the Company's financial advisor in
connection with the Plan. Tom Benninger, Global Head of UBS' Restructuring
Group, commented, "This transaction was designed to provide many substantial
benefits for the Company and its constituents. We are pleased to have been
involved in the development of such a promising plan."
The recapitalized Company intends to apply to have its new common stock listed
on the New York Stock Exchange or other national securities exchange upon the
consummation of the Plan.
None of the securities proposed to be issued in connection with the Plan
(including the New Notes and shares referenced herein or in the term sheet
attached to the Support Agreement, which is attached as an exhibit to the Form
8-K described below) have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state securities laws and unless so
registered may not be offered or sold in the United States except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state securities laws. The
Company will file shortly after the issuance of this press release a Form 8-K
with the Securities and Exchange Commission (the "SEC"), including the Support
Agreement, as well as the principal terms of the Plan and this press release as
exhibits thereto. Neither the Form 8-K nor the exhibits attached thereto,
including this press release, constitute an offer to sell or the solicitation of
offers to buy any security or constitute an offer, solicitation or sale of any
security in any jurisdiction in which such offer, solicitation or sale would be
unlawful. The Form 8-K and exhibits can be found on the SEC's website,
www.sec.gov, or through the Company's website, www.trump.com, free of charge
About the Company:
Through its subsidiaries, THCR owns and operates four properties and manages one
property under the Trump brand name. THCR's owned assets include Trump Taj Mahal
Casino Resort and Trump Plaza Hotel and Casino, located on the Boardwalk in
Atlantic City, New Jersey, Trump Marina Hotel Casino, located in Atlantic City's
Marina District, and the Trump Casino Hotel, a riverboat casino located in Gary,
Indiana. In addition, the Company manages Trump 29 Casino, a Native American
owned facility located near Palms Springs, California. Together, the properties
comprise approximately 451,280 square feet of gaming space and 3,180 hotel rooms
and suites. The Company is the sole vehicle through which Donald J. Trump
conducts gaming activities and strives to provide customers with outstanding
casino resort and entertainment experiences consistent with the Donald J. Trump
standard of excellence. THCR is separate and distinct from Mr. Trump's real
estate and other holdings.
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