NEW YORK, JUNE 25 -- As a midnight Tuesday deadline approached for Donald Trump to make overdue casino junk bond payments, his bankers were putting the final touches on a rescue plan that could put the flamboyant developer on the world's most generous personal spending allowance: $450,000 a month.
Opposition from Dresdner Bank of West Germany was described as the only barrier to final approval of the bailout, and bankers close to the negotiations expressed optimism that the package would be approved.
"There are still some concerns and questions, but people are hopeful," a banker said.
If the bailout plan fails, and Trump can't make junk bond payments on his Trump Castle Casino in Atlantic City, bondholders could begin legal proceedings to seize control of the casino.
In return for a new cash infusion from his lenders, Trump would be required to rein in his costly lifestyle, banking sources said. Under one proposal being considered, he would be granted a maximum of $450,000 a month for personal and household expenses for the rest of this year, the sources said.
That allowance would decline to $375,000 a month in 1991, and a lower figure in 1992, according to the sources, who confirmed reports in the New York Times and the Philadelphia Inquirer. It was unclear how much Trump's personal spending has totaled in the past, but the allowance was designed as a cost-cutting measure, the sources said.
As previously reported, the plan also provides for seven banks to lend Trump $65 million of fresh cash to enable him both to make $43 million in casino junk bond payments and to meet future obligations on his estimated $3 billion of debts. The banks would allow Trump to delay paying interest on a portion of his debts to ease the cash flow squeeze that has triggered the restructuring.
In return, in addition to curbing his personal spending, Trump would offer as fresh collateral major parts of his real estate, casino and airline holdings. Trump would also bring in new executives to improve management and hold down costs in his operations.
Trump said Friday that the more than 50 banks in the talks were "very close" to agreeing on the restructuring plan. Bankers said that Dresdner Bank was now the lone holdout, after a French bank was said to have softened its opposition.
If the plan is approved, Trump will receive the fresh cash he needs in two installments, beginning with an immediate $20 million "bridge loan" to enable him to meet the junk bond payment deadline, banking sources said. That would be enough for Trump's immediate needs because, while he is currently in default on $43 million, he has enough cash and bonds to cover the rest.