Mon Aug 9, 2004
By Peter Henderson

LOS ANGELES, Aug 9 (Reuters) - Trump Hotels & Casino Resorts Inc. (DJT.N: Quote, Profile, Research) on Monday said key bond holders had agreed to take the company into voluntary bankruptcy and restructure its $1.8 billion in debt to get a $400 million capital infusion.

Donald Trump, the real estate developer and star of reality show "The Apprentice" appeared poised to use his trademark line "You're fired!" on himself as chief executive and to cut his controlling stake to 25 percent if the deal with debt holders and a Credit Suisse First Boston equity fund goes through.

CSFB's DLJ Merchant Banking Partners III will co-invest $400 million with Trump and take a majority stake.

Trump will remain chairman of the company, which owns four casinos, including the Taj Mahal in Atlantic City, and has been seeking for months to restructure its debt.

It has come close to defaulting on interest payments in the process, although that did not threaten the developer's non-casino real estate projects, which are held separately.

A significant amount of casino bond holders had agreed to swap $1.8 billion in debt for $1.25 billion in new 10-year publicly traded debt and a mix of cash and stock in the new company.

The annual interest rate will fall to 7.875 percent from an average of approximately 12 percent, and the company said it would be able to secure up to $500 million in new financing.

Stockholders will have the right to buy new shares in a rights offering, which will leave shareholders other than Donald Trump with between 0.1 percent and 4 percent of the new company.

"The Company intends to effect the transactions in a Chapter 11 (bankruptcy) proceeding pursuant to a pre-negotiated plan of reorganization in order to implement the Recapitalization Plan in an efficient and timely manner," the company said.

It aims to begin the filing by the end of September and end in the the first quarter of 2005.

Trump himself will invest $55 million in the new company with CSFB and $15.9 million in notes. He would also receive land in Atlantic City and his real estate firm would get the right of first offer to serve as contractor for new development.

The restructuring will cut the company's annual cash interest expense by about $110.2 million.

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