Trump, DLJ Merchant Banking agree restructuring through prepackaged Chapter 11

New York, Aug. 9 - Trump Hotels & Casino Resorts, Inc. said it has reached agreement with Donald J. Trump, DLJ Merchant Banking Partners III, LP and an ad hoc noteholders committee on a restructuring plan to restructure its debt through a prepackaged Chapter 11 filing.

Under the plan, Trump Atlantic City Associates' $1.3 billion principal amount of 11¼% first mortgage notes due 2006 will be exchanged for $228.2 million in cash, $851.9 million principal amount of new 7 7/8% senior second priority mortgage notes and $107.2 million of common stock in the recapitalized company, equivalent to 18.4% of the primary common shares (i.e. on an undiluted basis).

Trump Casino Holdings' $406.3 million accreted amount of 11 5/8% first priority notes due 2010 will be exchanged for $55.9 million in cash and $350.4 million principal amount of the new 7 7/8% second priority mortgage notes.

Trump Casino Holdings' $68.8 million principal amount of 17 5/8% second priority mortgage notes due 2010 will be exchanged for $500,000 in cash, $47.7 million principal amount of the new 7 7/8% second priority mortgage notes and $15.7 million of common stock, or 2.7% of the primary common shares.

In total $1.25 billion of the new second priority notes will be issued.

Holders of the existing notes will also receive some accrued interest.

Recovery for the two series of Trump Casino Holdings notes is put at approximately the accreted value, equivalent to 95.6% of the principal amount.

DLJ Merchant Banking Partners III, which is a private equity fund of Credit Suisse First Boston, and Donald Trump currently own some of the second priority notes. They have agreed to contribute the cash and part of the equity recovery on the notes to other holders of the second priority notes who vote for the plan.

Under the recapitalization, Trump and CSFB private equity will invest $400 million of equity in the company. Trump will put up $70.9 million, $55 million of it as a co-investment with CSFB private equity and the remainder through his contribution of $15.9 million principal amount of the second priority notes and granting to the New York casino operator a new license agreement.

Existing stockholders, including Donald Trump, will either keep their shares or exchange them for new shares with the same economic terms.

They will also receive a 30-day right to purchase stock in a rights offering to raise $50 million.

Trump will own 25% of the reorganized company once the transactions are complete. He will be chairman of the board but give up his executive positions. He will also receive the World's Fair site in Atlantic City, N.J. for development for non-gaming use and the company's interest in the Miss Universe pageant.

If all other existing stockholders exercise their rights they will own 4% of the company on a primary basis or 3.9% on a fully diluted basis - or 0.1% if they do not exercise the rights.

Proceeds from the rights offering and amounts invested by Donald Trump will reduce CSFB private equity's investment.

If all holders including Trump exercise their rights then CSFB private equity will own 55.3% on a primary basis or 53.2% on a fully diluted basis.

Overall the restructuring will cut the publicly traded debt by $544 million to $1.25 billion from $1.8 billion. The average interest rate will fall to 7.875% from 12%, cutting annual cash interest expense by $110.2 million. The maturities will be extended to 10 years.

As part of the transactions, Trump will be able to obtain up to $500 million of new financing secured by a first priority lien on substantially all of the operating subsidiaries' assets.

Trump said the agreement will allow funding for deferred capital expenditures and future expansions at the company's properties, provide "significant liquidity" to support growth in elsewhere and allow expansion of the brand in other countries.

A committee formed by some holders of the first mortgage notes has agreed in principle to support the plan.

Trump said the restructuring is being carried out through a prepackaged Chapter 11 because of the large number of noteholders.

The filing is expected by the end of September, with completion anticipated in the first quarter of 2005.

Trump anticipates obtaining up to $100 million of debtor-in-possession financing.

A conference call on the restructuring will be held at 11 a.m. ET on Tuesday (U.S.: 877 329-7570, international: +1 201 210-3415).

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