Beal Bank, Icahn fail to meet rights offering threshold for Trump plan

By Caroline Salls

Pittsburgh, Feb. 19 - The proposed rights offering included in the fourth amended Trump Entertainment Resorts Inc. plan of reorganization filed by Beal Bank and Icahn Partners will not be completed because the offering did not meet the 50% subscription threshold, according to a Thursday filing with the U.S. Bankruptcy Court for the District of New Jersey.

According to a certification filed by The Garden City Group, Inc. senior director of bankruptcy operations Ronda K. Collum, Garden City Group received eight valid subscription forms in connection with the Beal Bank/Icahn plan from eligible holders subscribing to 1.74 million shares of new common stock for a total maximum subscription price of $38.7 million.

As previously reported, the Beal Bank/Icahn plan called for 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.

Backstop parties were scheduled to receive 3.7% of the new equity as a backstop fee, and Beal was to 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.

Under the fourth amended plan filed by Beal Bank and Icahn, the rights offering would not be completed unless 50% or more of the rights offering stock was validly subscribed and payment was received for the stock. The stock to be purchased under the backstop commitment was not to be counted toward the subscription threshold.

Calls made by Prospect News for further comment had not been returned as of late Friday.

The plan confirmation hearing is scheduled for Tuesday.

The disclosure statements for the Beal Bank/Icahn plan and a competing plan proposed by the company's 8½% senior secured noteholders were approved in early January.

The company has agreed to support the noteholders' plan, which also includes a $225 million rights offering to noteholders and general unsecured creditors in exchange for 70% of new common stock.

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

According to Collum's certification, Garden City received six valid subscription forms from eligible holders under the noteholders/company plan subscribing to a total of 8,421 shares of new common stock for a total maximum subscription price of $252,630.

Trump Entertainment Resorts, an Atlantic City, N.J.-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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