The deal is part of a bankruptcy reorganization plan Icahn negotiated to help the troubled casino company emerge from Chapter 11 (click here for the full plan).

TER's debtors have come out in support of the plan, which includes:

  • A capital contribution of $225 million in new equity capital--in exchange for 70% of the new equity in the reorganized debtors--in the form of a rights offering to holders of the debtors' 8.5% senior secured notes due and general unsecured claims backstopped by members of the Ad Hoc Committee of the holders of the senior lien notes--who will receive 20% of the new equity in the reorganized debtors as a backstop fee in consideration for their agreement to provide such backstop;
  • A $125-million repayment of Beal Bank's first lien loan and reinstatement of the balance of the loan on modified terms;
  • Five percent of the equity in the reorganized debtors and warrants to purchase up to an additional 5% of such new equity will be issued to Trump or his affiliates;
  • A pro rata distribution of 5% of the new equity in the reorganized debtors to holders of second lien notes and general unsecured claims; and
  • No recovery for old equity.

  • Trump Entertainment filed for bankruptcy protection in February, the third such filing for the company--which owns Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino and Trump Marina Hotel Casino--or its corporate predecessors. The deal was negotiated with Beal Bank and Beal Bank Nevada.

Icahn said in a statement that the plan offers the casino company the ability to weather current economic turmoil with no debt. He added that he will work together with Beal Bank to complete a plan of reorganization presented to the bankruptcy court for approval.

"We think that this team now has all of the tools necessary to quickly and successfully emerge from bankruptcy and rebuild a best-in-class operation," Beal says in a statement.

Icahn has restructured troubled gaming companies before. He combined several bankrupt casinos to form American Casino & Entertainment, which was sold in 2008 for more than a $1-billion profit. He is now working on restructuring Tropicana Entertainment and the Fontainebleau Las Vegas.

Donald and Ivanka Trump, who resigned from the company's board two days before it filed for bankruptcy back in February, tried to buy the company themselves and take it private. They were offering $114 million with Beal Bank, and were locked in a battle with bondholders for control of the company.

But Trump switched sides last month, saying the company's reorganization plan was mired in expensive litigation that made a successful outcome unlikely. He is not involved in the Icahn and Beal Bank proposal.

The company had been struggling with crushing debt that became even more painful when the economy soured and competition from slots parlors in Pennsylvania and New York increased, siphoning away some of Atlantic City's best customers by offering them places to gamble closer to home.

"Despite the current problems in Atlantic City, I continue to have great faith in the city's future," Icahn says in the statement.

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