Commission Delays Ruling on Trump Financial Restructuring; Deal in Limbo
Aug. 17, 1990
ATLANTIC CITY, N.J. (AP) _ Developer Donald Trump's financial footing became more precarious Friday when the state Casino Control Commission said it would not rule on his complex financial bailout until Tuesday.
Acting Chairwoman Valerie Armstrong said the commission needed more time to review more than 1,000 pages of documents.
Trump attorneys had argued that any delay beyond Friday could jeopardize Trump's $65 million bailout and trigger a chain of bankruptcies in his debt- riddled Atlantic City casino and Manhattan real estate empire.
''As far as I am concerned, this is expedited,'' Ms. Armstrong said.
Trump said before the meeting that he would not speculate on what a delay would mean for his empire.
''Who knows? Let's wait and see,'' Trump said.
But when Ms. Armstrong asked if a delay would ''mean the end of the world,'' Thomas Cerabino, a Trump attorney who negotiated the restructuring, replied, ''Quite possibly.''
Trump attorney Nicholas Ribis said the $65 million that seven banks loaned Trump in June to stave off default on a $43 million bond payment on the Trump Castle Casino Resort By The Bay is in escrow pending the commission's decision.
In essence, the deal made by the author of ''The Art of the Deal'' buys him time to sell some of his assets, possibly including the Trump Shuttle airline, to raise cash to pay off his estimated $3.2 billion debt. He pledged his three Atlantic City casinos as collateral for the $65 million emergency loan as part of an overall restructuring of the $1 billion in debt assumed on the casinos.
But the agreement isn't final until it is approved by the state casino commission.
That means a waiting game between now and Tuesday to see if any of the banks will argue that further delay could undermine its position because it would not be the first in the line of claims if Trump goes under.
In closing arguments Friday, the state Division of Gaming Enforcement recommended approval of the deal, but said it was doing so reluctantly and attached 13 conditions. Trump attorneys said the organization would have no trouble meeting the conditions, which were primarily reporting requirements.
''The situation for the Trump Organization is critical,'' said Thomas Auriemma, a deputy attorney general with the division. ''There are no easy and viable alternatives.''
Ribis pleaded in his closing statement that Trump has always honored his pledges and remains committed to the New Jersey casino industry, which has fallen on hard times.
Before the hearing, Trump said he had no immediate plans to sell any of his casinos. They might be worth hundreds of millions of dollars less than he estimated because of a declining real estate market and flat casino growth, according to an accountant's report.
Documents released Wednesday show Trump's debt at $3.2 billion against assets worth between $2.9 billion and $3.5 billion.