Trump Entertainment agrees to support noteholder reorganization plan

By Caroline Salls

Pittsburgh, Dec. 7 - Trump Entertainment Resorts, Inc. has withdrawn its joint plan of reorganization to become a co-proponent of the plan proposed by an informal committee of holders of the company's 8½% senior secured notes due 2015, according to an 8-K filed Monday with the Securities and Exchange Commission.

In November, Donald J. Trump terminated a purchase agreement included in the original plan submitted by the company, BNAC, Inc. and Donald Trump.

The key terms of the noteholders plan include:

• A capital contribution of $225 million in new equity capital, in exchange for 70% of the new equity in the reorganized company, in the form of a rights offering to the noteholders and general unsecured creditors.

The offering will be backstopped by members of the noteholders' committee, who will receive 20% of the new equity as a backstop fee;

• $125 million repayment of Beal Bank's first-lien loan and reinstatement of the balance of the loan on modified terms;

• 5% of the equity in the reorganized company and warrants to purchase up to an additional 5% of the new equity will be issued to Donald Trump or his affiliates;

• A distribution of 5% of the new equity to holders of second-lien notes and general unsecured claims; and

• No recovery for holders of old equity.

The plan is subject to confirmation by the U.S. Bankruptcy Court for the District of New Jersey.

Beal Bank plan

As previously reported, Beal Bank and Beal Bank Nevada proposed their own plan of reorganization for Trump Entertainment's case after Donald Trump terminated the agreement. The banks' plan was filed with the court on Friday.

The Beal Bank plan includes:

• A capital contribution of $225 million in new equity capital in exchange for 33.3% of the new equity in the reorganized company in the form of a rights offering to noteholders and general unsecured claims.

This offering will be backstopped by Beal, which will receive 10% of the new equity as a backstop fee;

• Beal will receive 56.7% of the new equity and a payment of $100 million from the cash proceeds of the rights offering in satisfaction of its first-lien loan;

• A distribution of 2.01% of the new equity or $13.9 million in cash to noteholders and general unsecured creditors; and

• No recovery for holders of old equity.

Trump Entertainment Resorts, an Atlantic City-based owner and operator of three casino resort properties, filed for bankruptcy on Feb. 17, 2009. Its Chapter 11 case number is 09-13654.

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