Trump amended plan, DIP loan granted bankruptcy court approval

By Caroline Salls

Pittsburgh, May 7 - Trump Entertainment Resorts Inc. received court approval of the supplemental modified plan of reorganization proposed by the company and its 8½% noteholders, as well as its proposed post-bankruptcy financing, according to Friday filings with the U.S. Bankruptcy Court for the District of New Jersey.

In April, the federal judge ruling on the case said that she would confirm the plan of reorganization proposed by the company and the informal committee of bondholders, but noted that she also would have been willing to confirm a competing plan submitted by Beal Bank and Icahn Partners if the company and noteholders did not agree to make some changes to their plan.

According to judge Judith H. Wizmur's ruling filed with the U.S. Bankruptcy Court for the District of New Jersey, both plans were confirmable.

Under the confirmed plan, $225 million of new equity will be injected into Trump Entertainment, and the company will benefit from improved liquidity and capital resources.

Additionally, the company said it will be able to retain the Trump brand for Atlantic City operations.

Required changes

The judge had said the Trump/noteholder plan was confirmable, subject to the following changes:

• A plan provision releasing Trump from a Trump personal guaranty must be deleted from the plan;

• A provision releasing the company's second-lien noteholders from liability for any alleged intercreditor agreement violations must be deleted from the plan;

• A provision offering rights offering backstop parties indemnification must be clarified and limited;

• The noteholders' committee, backstop parties and indenture trustee must apply under section 503 (b) of the Bankruptcy Code for reimbursement of fees and expenses as substantial contributors to the case; and

• The new term loan included in the company/noteholder plan must be modified to give first-lien lenders a 12% rate of interest and a premium.

Approval of the debtor-in-possession financing was also a condition of the plan confirmation.

DIP financing

Under the DIP loan, a $45 million bridge facility has been split into two separate loans, including a $24 million secured debtor-in-possession facility and a $21 million secured supplemental DIP facility.

The financing will be provided by an informal committee of 8½% senior secured noteholders and will provide liquidity from the date of confirmation of a plan of reorganization submitted by the noteholders until the effective date of that plan.

Wilmington Trust FSB is the administrative agent for the DIP financing.

Interest will be 10%.

The loan will terminate on the earliest of six months from closing, five months after entry of the plan confirmation order if a backstop agreement is not amended before then to extend an outside termination date and the effective date of the noteholders' plan.

The DIP facility lenders include note purchasers Avenue Capital Management II, LP; Contrarian Funds, LLC; Continental Casualty Co.; GoldenTree Asset Management, LP; MFC Global Investment Management U.S. LLC; Northeast Investors Trust; Polygon Global Opportunities Master Fund; and Interstate 15 Holdings, Ltd.

Plan terms

As previously reported, under the Trump/noteholder plan:

• $225 million in new equity capital would be contributed from a rights offering representing 70% of the new common stock of the reorganized company, backstopped by some second-lien noteholders, who will receive 20% of the new common stock as a backstop fee;

• First-lien lenders would receive $125 million as a loan repayment from the rights offering, a new term loan in the principal amount of the company's $459 million enterprise valuation, minus the $125 million from the rights offering, 100% of the net proceeds from any sale of the Trump Marina, or the right to credit bid, and 100% of the equity interests in TCI 2, unless they decide not to accept that distribution;

• Second-lien noteholders will receive an equity distribution equal to their share of 5% of the new common stock;

• General unsecured creditors will receive cash equal to the amount of new common stock received by the noteholders;

• Accredited investors who hold either general unsecured claims or second-lien note claims will receive a share of subscription rights to acquire up to 70% of the new common stock or the cash equivalent of the subscription rights; and

• Holders of old equity interests will receive no distribution.

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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