NEW YORK, NOV. 16 -- Real estate developer Donald Trump's lawyers and bondholders of his Taj Mahal Casino negotiated past a midnight deadline and into the morning today, but declined to say whether they had reached agreement to minimized the damaged to Trump if the Atlantic City property falls into bankruptcy proceedings as expected.
Trump and the bondholders scheduled a news conference for noon today to announce results of the talks, which observers viewed as a positive sign. But both sides declined to comment on whether Trump had defaulted at midnight on a $47 million interest payment due on $675 million of junk bonds floated to finance the Taj Mahal, the biggest of his three Atlantic City casinos.
Late Thursday evening, sources on both sides of the talks had said that Trump would miss making the interest payment.
"There absolutely will be a default. He doesn't have the moola," said Robert M. Miller, the lawyer representing the largest group of bondholders.
Trump has a 30-day grace period to come up with the cash before the bondholders can seize the casino. So, sources said, the key question now is whether Trump and the bondholders can agree on a financial bailout package that would give the bondholders an ownership stake in the casino in return for lowering Trump's interest payments.
Such a deal would not be enough to keep the Taj Mahal out of Chapter 11 bankruptcy proceedings, the sources said, but it would give Trump a chance to put the Taj Mahal on a sound financial footing and eventually bring the casino out of bankruptcy reorganization. If no agreement is reached, however, then Trump and the bondholders would enter what probably would be a prolonged legal battle in bankruptcy court, in which the developer easily could lose the casino altogether.
Trump abruptly broke off talks with the bondholders on Tuesday after they threatened to force the casino into bankruptcy as early as Friday. But he quickly ordered his representatives to return to the negotiating table after tempers had cooled.
The negotiations "have been going on at a good clip and in a favorable fashion," Edward M. Tracy, president of Trump's Atlantic City properties including the Taj Mahal, said this evening. "Both sides have rethought their position and have decided it's in the best interest of the project to continue negotiating," he said.
About two dozen lawyers, executives, bankers and bondholders were negotiating at the midtown Manhattan offices of Miller's law firm, Berlack, Israels & Liberman.