Morgan Stanley joins UBS in Trump loan

Ed Leefeldt

Wednesday, Oct. 27, 2004 | 9:13 a.m.

Morgan Stanley will join UBS Inc. in arranging a $500 million loan to developer and television personality Donald Trump's Trump Hotels & Casino Resorts Inc.

The credit line will be used to renovate and expand the company's Atlantic City casinos and enter new markets, Trump Hotels said. The credit line will be secured by a first priority lien on most all of the company's assets. A first priority lien ranks ahead of other liens and bonds for collection in the event of a default.

"This is the first formal engagement we've had with Morgan Stanley, although we've had a long-standing relationship," Scott Butera, executive vice president of Atlantic City-based Trump Hotels, said in a phone interview.

Morgan Stanley and UBS officials didn't immediately return calls and e-mails seeking comment.

On Oct. 21 Trump Hotels reached an agreement with bondholders that will reduce the company's debt through a bankruptcy and leave Trump, star of NBC's "The Apprentice," in charge.

The agreement with a majority of bondholders would cut the company's $1.8 billion in debt by $400 million as part of a filing for Chapter 11 bankruptcy protection expected by the end of November.

Proceeds from the new loan are expected to fund "immediate capital improvements," according to the press release, which may include building a hotel tower at its Taj Mahal casino, Butera has said.

Terms of the loan weren't disclosed. Moody's Investors Service rates the company Caa1 or seven levels below investment grade, and Standard & Poor's rates it an equivalent CCC+.