Taking Away His Credit Cards

For all his financial troubles, Donald Trump remains a master of the theatrical gesture. Negotiating with dozens of bankers in Manhattan on a plan to restructure his $2 billion debt, he suddenly proclaimed it was time for lunch. Trump went to the phone, called a nearby McDonald’s from memory and ordered 25 Big Macs and 25 Quarter Pounders. Hamburgers, he declared, were among his favorite foods. Coming from a person who was asking to borrow an additional $65 million, this was just the kind of down-to-earth taste the bankers were hoping to find.

In the deal of his life, Trump won his battle to avoid bankruptcy last week but was forced to give his bankers financial control over his empire and his purse strings. A total of 77 lenders agreed in principle to give him a five- year, $65 million cash infusion to enable the overleveraged tycoon to meet a $43 million interest payment on junk bonds issued to finance Trump’s Castle Hotel and Casino in Atlantic City. Failure to make the payment could have pushed the developer’s holdings into a chain reaction of defaults. “This is a deal that will go down in the textbooks as the way banks and entrepreneurs should deal with each other,” Trump declared. Not everybody agreed. Said a banker: “I think it’s a tremendous black eye on the American banking system when a guy who acts the way he does gets $2 billion in loans.”

The rescue, which included an agreement to suspend interest payments on $850 million of Trump’s loans, put the flamboyant developer on a short leash. Trump agreed to submit his business decisions to the banks for review and promised to hire a chief financial officer to scrutinize the Trump Organization, which manages his holdings. “Trump won’t have to get permission to go to the toilet, but on anything else he’ll have to ask the banks,” quipped a Wall Street expert familiar with the deal.

Even worse for Trump’s ego, the big spender will have to subsist on a % monthly allowance, which bankers will supervise. Instead of the staggering $583,000 that he spent on food, shelter and other living expenses in May, Trump will be required to limit himself to a merely stupendous $450,000 a month for the rest of 1990. His allowance will shrink to $375,000 in 1991 and a stingy $300,000 in 1992.

Much of the money covers the upkeep on his three Pharaonic homes. The annual maintenance for Trump’s 45-room spread in Greenwich, Conn., comes to an estimated $400,000. His Mar-a-Lago estate in Palm Beach, Fla., costs about $1 million a year to run. His allowance will also have to cover $650,000 in annual support payments for his estranged wife Ivana and their three children. Exempted from the budget is Trump’s fancy transportation, which is up for sale: his $30 million yacht, the 282-ft. Trump Princess (he says he wants $115 million for it); his $8 million, French-built Super Puma helicopter; and his $8 million personal 727 jet.

Bankers went along with the agreement, which amounts to a privately arranged bankruptcy, in the hope that the value of Trump’s properties will rise. Trump could then sell many of his holdings to raise cash to repay his loans. But if the depressed Northeastern real estate market fails to improve, Trump could still wind up in bankruptcy court.

The perils of lending to Trump became apparent last week, when Manufacturers Hanover, a major Trump creditor, acknowledged that it has been unable to collect interest on $157 million of loans to the developer. Meanwhile, gaming experts said gamblers from Japan and other Asian nations have begun to shun Trump’s casinos out of fear that his troubles will bring them bad luck. While that may be mere superstition, even bettors seem to be showing more prudence than bankers these days.

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