Casino Commission Gives Castle Restructuring Until July 31; Ups Fine
ATLANTIC CITY, N.J. (AP) _ The Trump Castle casino on Wednesday submitted an amended restructuring proposal to state gaming regulators, who gave the ailing property until July 31 to return with a completed deal.
The state Casino Control Commission also raised a suggested $30,000 fine against the casino to $65,000. The punishment stemmed from a $3.5 million chip purchase made in December by Donald Trump’s father, Fred.
Trump Castle, which failed to make a $41.1 million bond payment due June 17, is still proposing to swap half of Trump’s equity in the casino for reduced interest rates on $290 million in bonds, from 13 3/4 percent to 9 percent. The casino also still plans to file for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.
However, the amended agreement would tie Trump’s $1.5 million management fee to performance levels of the casino.
Commission chairman Steve Perskie said the casino must return for a July 31 hearing with an executed, binding agreement with its bondholders.
″If there is any non-compliance with the following schedule, the commission will take whatever action is deemed necessary to protect and preserve the public interest,″ Perskie said. ″Further delays, for whatever reason, simply will not be tolerated.″
The commission conditionally relicensed the casino in May, but has kept open the question of the casino’s financial stability.
Trump’s two other casinos and his entire organization have met the commission’s criteria for financial stability, but all three casinos have performed poorly in the last year.
Trump did not attend the hearing. Nick Ribis, the head of his Atlantic City properties, said afterward the tentative deal will gain the necessary two- thirds approval from bondholders.
The commission also acted on a fine for the Trump Castle. The state Division of Gaming Enforcement and the casino had agreed to a $30,000 fine over Fred Trump’s chip purchase.
The elder Trump never redeemed the chips after buying them to help his son make a bond payment on the casino.
However, Fred Trump was not qualified as a financial source at the time. State law requires investigations of people who help finance a casino.