Trump bonds up 2 points on restructuring plan; Federal-Mogul better; Tower firmer

By Ronda Fears and Paul Harris

New York, Oct. 21 - Trump Hotels & Casino Resorts Inc.'s latest debt restructuring plan, which has backing from a majority of bondholders and is expected to be parlayed into a pre-packaged bankruptcy filing by the end of November, pushed its bonds up about 2 points Thursday.

The Trump A.C. bonds moved up to 87 bid, 88 offered, a distressed bond trader said. Another trader noted hedge fund players in the situation were frantic covering short positions in the stock, which shot up more than 30% to 68 cents as 2.7 million shares traded - about four times the normal volume in the stock.

Trump Hotels announced Thursday that the company, Donald Trump, and a majority of Trump bondholders have agreed to support a reorganization plan which will become the foundation for a Chapter 11 filing the company expects to be confirmed by mid-April and consummated by next May. The company had been working on a similar plan before but those talks, with DLJ Merchant Banking Partners, fell through last week.

Meanwhile, the company is trying to arrange for up to $100 million interim financing.

Under the plan, bondholders will exchange $1.8 billion of notes for $74 million in cash, $1.25 billion second priority mortgage notes, and $395 million of equity. From 57% to 81% of bondholders agreed to the plan, which also calls for Donald Trump to invest $71.4 million into the recapitalized company.

The plan will reduce the company's debt by $400 million and lower average interest rates to 8.5%, resulting in annual interest expense savings of about $98 million. It also permits a working capital facility of up to $500 million secured by a first priority lien on substantially all company assets.

Trump to remain a big player

Donald Trump will remain chairman of the company, but bond market players were not impressed with the celebrity-come-lately, already an icon of American business who has expanded his empire into the entertainment realm with television series "The Apprentice" and more recently with a cologne line under the Estee Lauder label Aramis.

"Thankfully his acting career is really taking off because he certainly isn't a very good casino operator," a trader quipped

Trump said his investment will consist of $55 million cash and the conversion of $16.4 million principal amount of notes owned by him into shares of the recapitalized company.

On consummation of the plan, Trump also is expected to remain the largest individual stockholder, with about a 27% equity stake.

Existing stockholders' interests would be diluted to 0.05% of the total equity of the recapitalized company and reclassified pursuant to a reverse stock split on consummation of the plan, at which point they also would receive one-year warrants with a strike price the same as Trump's per share 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 all warrants are not exercised, would be distributed to noteholders. If all warrants are exercised, current stockholders would hold 8.3% of the reorganized company stock, Trump Atlantic City noteholders 63.7% and Trump Casino Holdings first priority noteholders 1.4% on a fully diluted basis.

Federal-Mogul still firming

Federal-Mogul Corp. paper, both the bonds and bank revolver, were firmer again Thursday on the profit forecasts for the Southfield, Mich., supplier of vehicle parts, components, modules and systems.

Also pushing the paper higher was the company's recently launched $500 million 12-month revolving debtor-in-possession facility and $1.43 billion exit facility, consisting of a $500 million asset-based five-year revolver, an $828 million senior secured seven-year term loan and a $105 million synthetic letter-of-credit facility.

"They're syndicating a new deal so there's a lot of info out there. People are looking at it again - a few buyers, a few sellers," a bank debt trader said. "In this market it doesn't take much to make things move higher."

The bank revolver felt stronger, the trader said, with quotes of 92 bid, 93 offered on Thursday, up around a quarter to a half a point from the previous session. The bonds also were better by "a touch," as a distressed bond trader put it, with a bid of 29 and offered at 29.5.

The paper was still getting a bit "of a bounce" following Wednesday's filing of earnings projections with the bankruptcy court, traders said. The paper had gained on the headlines Wednesday, too.

Projections for Federal-Mogul include estimates for $1.23 billion in profits for 2004 on revenues of $5.89 billion, $55 million in earnings on net sales of $5.94 billion for 2005, $202 million in net profits on revenues of $6.09 billion in 2006 and $246 million in earnings on sales of $6.23 billion in 2007.

Furthermore, EBITDA for 2004 is estimated at $585 million, $683 million in 2005, $860 million in 2006, and $929 million in 2007.

Tower bounces on more noise

R.J. Tower and Tower Automotive Inc. bonds have been "all over the map this week" on rumors speculating the Novi, Mich.-based auto parts and components maker is working on a collateralization financing package that would provide much-needed capital, a distressed bond trader said.

Believers in the chatter pushed up the R.J. Tower 12% notes due 2013 to 67.5 bid, 69.25 offered right at the end of the day Thursday, he said.

"The rumor now is that it's a $100 million accounts receivable securitization," the trader commented, adding, "But I think people still doubt it." Buzz circulating in the market Wednesday involved a $200 million accounts receivable securitization facility; nothing has been officially announced by Tower.

Indeed there non-believers in any deal, another trader said. He didn't think the R.J. Tower bond moved much off the 64.5 mark where they settled out Wednesday after a tumultuous session as well. "Maybe they firmed up a little bit, not much" he said.

On Wednesday, traders said the Tower bonds "got kicked in the teeth," taking a spill late in the day after having firmed Tuesday on the noise that the company had approached lenders with an amendment proposal that would let it get a $200 million in financing from it's accounts receivables. The Tower bonds were seen as high as 71 bid on Tuesday.

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