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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 20, 1997
TRUMP'S CASTLE FUNDING, INC.
(Exact name of registrant as specified in its charter)
New Jersey 1-9029 11-2739203
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
One Castle Boulevard
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 340-5191
TRUMP'S CASTLE ASSOCIATES, L.P.
(Exact name of registrant as specified in its charter)
New Jersey 1-9029 22-2608486
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
One Castle Boulevard
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 340-5191
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Item 5: Other Events.
On January 20, 1997, Trump Hotels & Casino Resorts, Inc. ("THCR") and
Trump Hotels & Casino Resorts Holdings, L.P. ("THCR Holdings") announced that
they have executed a letter of intent (the "Letter of Intent") with Colony
Capital, Inc. ("Colony Capital"), which contemplates, among other things, that
an institutional fund (or an affiliate thereof) for which Colony Capital acts as
the investment advisor, will purchase preferred securities and a 51% common
equity interest in Trump's Castle Associates, L.P. ("Castle Associates"), the
owner and operator of Trump's Castle Casino Resort in Atlantic City, New Jersey
("Trump's Castle"), and warrants as described below in THCR.
Colony Capital intends to invest an aggregate of $125 million for which
it will receive $62.5 million Series A Cumulative Preferred Senior Equity and
$62.5 million Series B Cumulative Preferred Exchangeable Equity ("Series B
Preferred") of Castle Associates (cumulatively, "Preferred Securities"), as well
as 51% of the common equity of Castle Associates and warrants (the "Warrants")
to purchase an aggregate of 2,000,000 shares of Common Stock, par value $.01 per
share, of THCR (the "THCR Common Stock") at an exercise price of $15.00 per
share. The Preferred Securities both have a compounding dividend rate of 15%
payable semiannually and are due in eight years. The Board of Directors of the
general partner of Castle Associates will be reconstituted to a five member
Board, three of whom will be designated by Colony. THCR Holdings will retain a
49% interest in Castle Associates and will continue to manage Trump's Castle. In
connection with the transaction, all of the Increasing Rate Subordinated
Pay-in-Kind Notes due 2005 of Trump's Castle Funding, Inc. owned by THCR
Holdings will be cancelled.
During the first four years, the Preferred Securities may be redeemed
in their entirety at a price equivalent to a 25% annually compounded rate of
return, but with a minimum nominal profit to Colony Capital of $50 million if
redeemed within 18 months. After the fourth year, Colony Capital will have the
right to exchange the Series B Preferred (plus accrued dividends) for THCR
Common Stock (up to a maximum of 8.5 million shares) and preferred stock of THCR
or cash, if needed. The purchaser will also receive to be agreed upon
registration rights and anti-dilution protections. Further, if THCR pursues
under certain circumstances an alternative transaction with another party,
Colony Capital will be entitled to the Warrants and expense reimbursement.
THCR and Colony Capital are moving to sign definitive agreements by
April 15, 1997. The consummation of the transactions contemplated by the Letter
of Intent are subject to, among other things, the execution of definitive
agreements and the receipt of certain consents and approvals.
Reference is made to the Letter of Intent, dated January 20, 1997, and
the press releases of THCR, dated January 20 and 22, 1997, attached as Exhibits
hereto and incorporated herein by reference.
Item 7: Financial Statements and Exhibits.
(c) Exhibits:
99.1: Letter of Intent among THCR, THCR Holdings and Colony Capital,
dated January 20, 1997.
99.2: Press Release of THCR, dated January 20, 1997.
99.3: Press Release of THCR, dated January 22, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this Current Report to be signed on its behalf
by the undersigned hereunto duly authorized.
TRUMP'S CASTLE FUNDING, INC.
January 22, 1997 /s/ Donald J. Trump
By: Donald J. Trump
Title: President and Treasurer
TRUMP'S CASTLE ASSOCIATES, L.P.
January 22, 1997 /s/ John P. Burke
By: John P. Burke
Title: Treasurer
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EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
- ----------- ------------ ----------------
99.1 Letter of Intent among Trump Hotels
& Casino Resorts, Inc. ("THCR"),
Trump Hotels & Casino Resorts
Holdings, Inc. and Colony Capital,
Inc. dated January 20, 1997.
99.2 Press Release of THCR, dated
January 20, 1997
99.3 Press Release of THCR, dated
January 22, 1997.
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TRUMP HOTELS & CASINO RESORTS, INC.
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
2500 Boardwalk
Atlantic City, New Jersey 08401
January 20, 1997
Colony Capital, Inc.
1999 Avenue of the Stars
Suite 1200
Los Angeles, CA 90067
Ladies and Gentlemen:
This letter is intended to summarize our discussions to date with
respect to a series of transactions (collectively, the "Transaction") proposed
to be entered into among (i) an institutional fund (or an affiliate thereof) for
which Colony Capital, Inc. acts as the investment advisor ("Colony"), (ii) Trump
Hotels & Casino Resorts, Inc. ("THCR"), a Delaware corporation, and (iii)
Trump's Castle Associates, L.P. ("TCA"), a New Jersey limited partnership which
is wholly owned by Trump Hotels & Casino Resorts Holdings, L.P. ("THCR
Holdings") and which owns and operates the Trump's Castle Hotel and Casino
Resort in Atlantic City, New Jersey (the "Casino-Hotel").
1. Transaction. (a) Subject to the fulfillment of the terms and
conditions set forth herein and in the Annexes attached hereto, the parties will
cause the following simultaneous transactions to occur:
(i) THCR Holdings will cause to be sold to Colony (or an
entity formed by it for purposes of the Transaction) (the "Purchaser"),
and the Purchaser shall purchase, free and clear of any liens and
encumbrances, for an aggregate cash purchase price of $125,000,000
payable on the closing of the Transaction (the "Closing"), (A)
preferred equity of TCA and its general partner or an entity formed by
THCR Holdings to hold 100% of the outstanding equity interests in such
entities (collectively, the "Issuer"), designated as Series A
Cumulative Preferred Equity (the "Series A Preferred") having an
aggregate initial liquidation value (or its equivalent) equal to
$62,500,000 and having the terms set forth on Annex A to this letter,
(B) preferred equity of the Issuer designated as Series B Exchangeable
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Cumulative Preferred Equity (the "Series B Preferred") having an
aggregate initial liquidation value (or its equivalent) equal to
$62,500,000 and having the terms set forth on Annex B to this letter
and (C) common equity (the "Common Equity") of the Issuer initially
representing, in the aggregate, 51% of the outstanding common equity
interests in the Issuer and having the terms set forth on Annex C
hereto (the Series A Preferred, Series B Preferred and Common Equity
are collectively referred to herein as the "Securities");
(ii) with the issuance of the Securities, subject to the
terms and provisions of the Definitive Agreements (as defined below),
THCR will issue to the Purchaser warrants to purchase an aggregate of
2,000,000 shares of Common Stock, par value $.01 per share (the "THCR
Common Stock"), of THCR (the "THCR Warrant") having the terms set forth
on Annex D hereto;
(iii) THCR Holdings shall surrender for cancellation all
Increasing Rate Subordinated Pay-in-Kind Notes due 2005 (the "Castle
PIK Notes") of Trump's Castle Funding, Inc. beneficially owned by THCR
Holdings for no consideration; and
(iv) the Purchaser and THCR Holdings shall enter into a
stockholders agreement (the "Stockholders Agreement") having the terms
set forth in Annex E hereto.
(b) The Transaction will occur on the date (the "Closing Date") the
conditions set forth in the Definitive Agreements shall have been satisfied.
2. Definitive Agreements. Promptly following the date hereof, the
parties will negotiate in good faith mutually satisfactory definitive agreements
and related documents with respect to the Transaction (the "Definitive
Agreements"), including a securities purchase agreement having the terms set
forth in Annex F hereto (the "Purchase Agreement"), certificates of designation
for the Series A and Series B Preferred, the THCR Warrants, the Stockholders
Agreement, appropriate governing documents for the Issuer and such other
documents and agreements as may be necessary to implement the Transaction on the
terms described herein and in the Annexes hereto. In connection therewith, the
parties hereto acknowledge that the form of the Transaction may be modified to
achieve the most efficient tax, accounting, ERISA and legal structure as the
parties hereto shall reasonably deem to be appropriate.
3. Conditions to the Transaction. Consummation of the Transaction will
be subject to the fulfillment of the following conditions:
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(a) the negotiation and execution of mutually acceptable
Definitive Agreements;
(b) the receipt by each of the parties hereto (and their
respective affiliates) of all licenses, approvals and qualifications
required by the New Jersey Casino Control Commission and the New Jersey
Division of Gaming Enforcement with respect to the Transaction;
(c) the receipt by THCR Holdings, on terms acceptable to it,
of any consents required from the holders of its public indebtedness
for the consummation of the Transaction; provided, however, that if any
of such terms adversely impact TCA or the Issuer, such terms shall also
be acceptable to the Purchaser;
(d) the receipt by TCA, on terms acceptable to the parties
hereto, of any consents required from the holders of its indebtedness
for the consummation of the Transaction;
(e) the approval by each of the Board of Directors of THCR and
ColonyGP II, Inc. (which is under common control with Colony Capital,
Inc.) of the final terms of the Definitive Agreements; and
(f) the satisfaction of each of the other conditions to
Closing that may be contained in the Definitive Agreements.
4. Confidentiality; Press Releases; Information. (a) The parties shall
hold all information and documents received from any other party in connection
with the Transaction (the "Information") in strict confidence, except
Information otherwise available to the public or required to be disclosed by
law, legal process or any regulatory authority; provided, however, that
Information may be given to the affiliates, partners, attorneys, accountants and
financial advisors and sources of the parties, all of whom shall maintain the
confidentiality of the Information as set forth in this paragraph 4. In the
event the Transaction is not consummated, all Information in written form shall
be returned to the party originally delivering it; and oral Information shall
continue to be subject to the terms of this paragraph 4. For the purposes of
this letter and unless and until the parties execute and deliver the Definitive
Agreements, the term "Information" shall also include the status of negotiations
among the parties with respect to the Transaction.
(b) In the event that a party is requested pursuant to, or required by,
applicable law, regulation or legal process to disclose any of the Information,
it shall notify the other parties promptly so that the other parties may seek a
protective order or other appropriate remedy or, in their sole discretion, waive
compliance with the terms of this paragraph 4. In the
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event that no such protective order or other remedy is obtained, or that
compliance is waived, the party disclosing the Information shall furnish only
that portion of the Information which under the advice of counsel is legally
required to be disclosed and shall exercise all reasonable efforts to obtain
reliable assurances that confidential treatment will be accorded to such
Information.
(c) Upon the execution of this letter, THCR shall issue a press release
with respect to the Transaction in the form attached hereto as Exhibit A.
(d) The Issuer, TCA, THCR, THCR Holdings and the Purchaser will provide
each other with reasonable access to its books and records relevant to the
completion of the Transaction, subject to the confidentiality provisions set
forth herein.
5. No Binding Agreement; Further Agreements. (a) This letter sets forth
the mutual intentions and understandings of the parties with respect to the
Transaction, but does not contain all matters upon which an agreement must be
reached in order for the Transaction to be consummated. A binding commitment
with respect to the Transaction will result only from the execution and delivery
of the Definitive Agreements, subject to the terms and conditions expressed
therein.
(b) Neither this letter nor any past or future conduct of the parties,
their affiliates, agents or representatives, with respect to the matters
contemplated hereby (other than the execution and delivery of the Definitive
Agreements), shall be deemed to constitute a binding or enforceable agreement,
express or implied, for the Transaction or any other transaction, or an offer
which, if accepted, could become binding or enforceable. Except with respect to
any provision hereof which is specifically identified as being binding on the
parties, the parties agree not to institute or maintain any claims or
proceedings which seek to establish, or which are otherwise based upon an
assertion, that any such contractual relationship exists, other than pursuant to
the Definitive Agreements, if negotiated, executed and delivered by the parties.
(c) Notwithstanding the two preceding subparagraphs, paragraphs 4
through 10 hereof, inclusive, are intended to and will constitute the binding
agreements of the parties with respect to the matters set forth therein.
6. Alternative Transaction. (a) THCR and THCR Holdings agree that, if
prior to a Termination Event (as defined below) THCR, THCR Holdings or TCA
enters into active negotiations with another party with respect to a
substantially similar or superior financial transaction as compared to the
Transaction, which negotiations result, within nine months from the date hereof,
in THCR, THCR Holdings or TCA, directly or indirectly, consummating or executing
an agreement or letter of intent with respect to an
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Alternative Transaction (as defined below), THCR shall (i) issue and deliver the
THCR Warrant to the Purchaser, for a consideration of $10.00, within ten days
from the date of the consummation of such Alternative Transaction and (ii)
reimburse the Purchaser for its reasonable out-of-pocket expenses (including
fees and expenses of its counsel) incurred by the Purchaser in connection with
the Transaction in an amount not to exceed $325,000.
(b) As used herein:
(i) a "Termination Event" shall mean any of the following:
(A) prior to the execution and delivery of the Definitive Agreements,
the Purchaser (x) upon an inquiry from the Issuer, shall have failed to
provide reasonable assurances that the Purchaser had not abandoned the
Transaction or (y) otherwise shall have ceased to pursue diligently the
Transaction; (B) the Definitive Agreements shall have been terminated
pursuant to their terms by THCR Holdings as a result of a breach by the
Purchaser of any of the terms thereof; (C) the inability of the
Purchaser (and its affiliates) to obtain any licenses, approvals and
authorizations required to be obtained on its (or their) part with
respect to the Transaction by the termination date set forth in the
Definitive Agreements; or (D) the Definitive Agreements shall not have
been entered into by April 15, 1997, unless such failure shall have
resulted from THCR Holdings' failure to negotiate the Definitive
Agreements in good faith; and
(ii) an "Alternative Transaction" shall mean (A) the sale
of all or a majority interest in the Casino-Hotel or THCR Holding's
equity interest therein or (B) a significant refinancing or
recapitalization with respect to the capital structure of TCA, that, in
either case, is a transaction which the Board of Directors of THCR has
concluded, in the good faith exercise of its fiduciary duties,
represents a superior or substantially similar financial transaction to
the public stockholders of THCR as compared to the Transaction.
7. Termination. This Letter of Intent shall terminate and be of no
force and effect on the earlier of (a) April 15, 1997 (unless extended by a
writing executed by the parties), (b) the execution and delivery of the
Definitive Agreements or (c) the execution by THCR or its affiliates of a
binding agreement with respect to an Alternative Transaction, except that the
provisions of paragraphs 4, 5, 6, 8, 9 and 10 hereof shall survive any of such
termination.
8. Expenses. Except as otherwise provided in paragraph 6 hereof, each
party will bear its own expenses in connection with
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this letter, the Definitive Agreements and the transactions contemplated hereby
and thereby.
9. Governing Law. This letter shall be governed by and construed in
accordance with the laws of state of New York without giving effect to conflict
of law principles thereof.
10. Counterparts. This letter may be executed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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If you are in agreement with the foregoing terms, please indicate your
intention to proceed with the Transaction, subject to the terms of this Letter
of Intent, by executing the enclosed copies of this Letter of Intent and
returning one of such executed copies to us.
Very truly yours,
TRUMP HOTELS & CASINO RESORTS, INC.
By: /s/ Nicholas L. Ribis
Name: Nicholas L. Ribis
Title: President and Chief
Executive Officer
(As to paragraph 6 only)
TRUMP HOTELS & CASINO RESORTS,
HOLDINGS, L.P.
By: Trump Hotels & Casino Resorts,
Inc., its general partner
By: /s/ Nicholas L. Ribis
Name: Nicholas L. Ribis
Title: President and Chief
Executive Officer
ACCEPTED AND AGREED TO
AS OF THE DATE HEREOF:
COLONY CAPITAL, INC.
By: /s/ W. L. Rogers
Name: W. L. Rogers
Title: Principal
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ANNEX A
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Series A Cumulative Preferred Equity
Summary of Terms
Issuer: The Issuer.
Issue Date: The Closing Date.
Issue: Series A Cumulative Preferred Equity.
Interests/Liquidation Interests having an aggregate initial liquidation
Preference: value (or its equivalent) of $62,500,000.
Ranking: The dividends/distributions and liquidation
preference on the Series A Preferred will rank
senior to the Series B Preferred and the Common
Equity.
Dividends/ At the rate per annum of 15% of the liquidation
Distributions: preference of the Series A Preferred, payable
semi-annually commencing on the six-month
anniversary of the Closing Date. At the option of
the Issuer, semi-annual dividends may be paid in
cash or may accumulate and compound semi-annually.
Optional Redemption: The Series A Preferred will be redeemable, at the
option of THCR or the Issuer, in whole but not in
part, on not less than 20 days prior written notice
to the holders, until the expiration of four years
from the Closing Date, at the redemption prices
specified below. A redemption of the Series A
Preferred must be accompanied by a simultaneous
redemption of the Series B Preferred. The redemption
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price will equal a price which provides the holder
with an annually compounded rate of return (based on
the original purchase price of the Series A
Preferred) equal to 25%; provided, however, that if
the redemption occurs within 18 months of the date
of issuance, the redemption price will be increased
to an amount which represents a nominal profit for
the Series A Preferred equal to $25,000,000. After
the fourth anniversary of the date of issuance and
until the mandatory redemption date, the Series A
Preferred will not be redeemable by the Issuer. Upon
any optional redemption of Series A Preferred in
accordance with this paragraph, the holder will
cause to be surrendered to the Issuer, for no
additional consideration, all Common Equity
(including any additional Common Equity issued with
respect thereto as set forth on Annex C) issued
pursuant to the terms of the Transaction.
Mandatory Redemption: On the eighth anniversary of the date of issuance.
Exchange Rights: None.
Voting Rights: None, except as provided in the Covenants paragraph
in this Annex A.
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Transferability: Transfers of any Series A Preferred will be subject
to the provisions of the Stockholders Agreement
described on Annex E of the letter agreement to
which this Annex is attached.
Warrants: The Series A Preferred will be issued with warrants
to purchase an aggregate of 1,000,000 shares of THCR
Common Stock (subject to anti-dilution provisions to
be agreed by the parties) on the terms described in
Annex D to the letter agreement to which this Annex
is attached.
Covenants: The issuance of any series of preferred equity of
the Issuer ranking senior to the Series A Preferred
will require a vote of the holders of two-thirds in
aggregate liquidation preference of the Series A
Preferred outstanding; and other customary
covenants.
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ANNEX B
Series B Exchangeable Cumulative Preferred Equity
Summary of Terms
Issuer: The Issuer.
Issue Date: The Closing Date.
Issue: Series B Cumulative Exchangeable Preferred Equity.
Interests/Liquidation Interests having an aggregate initial liquidation
Preference: value (or its equivalent) of $62,500,000.
Ranking: The dividends/distributions and liquidation
preference on the Series B Preferred will rank
junior to the Series A Preferred and senior to the
Common Equity.
Dividends/Distributions: At the rate per annum of 15% of the liquidation
preference of the Series B Preferred, payable
semi-annually commencing on the six-month
anniversary of the Closing Date. At the option of
the Issuer, semi-annual dividends may be paid in
cash or may accumulate and compound semi-annually.
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Optional Redemption: The Series B Preferred will be redeemable, at the
option of THCR or the Issuer, in whole but not in
part, on not less than 20 days prior written notice
to the holders, until the expiration of four years
from the Closing Date, at the redemption prices
specified below. A redemption of the Series B
Preferred must be accompanied by a simultaneous
redemption of the Series A Preferred. The redemption
price will equal a price which provides the holder
with an annually compounded rate of return (based on
the original purchase price of the Series B
Preferred) equal to 25%; provided, however, that if
the redemption occurs within 18 months of the date
of issuance, the redemption price will be increased
to an amount which represents a nominal profit for
the Series B Preferred, equal to $25,000,000. After
the fourth anniversary of the date of issuance and
until the mandatory redemption date, the Series B
Preferred will not be redeemable by the Issuer. Upon
any optional redemption of Series B Preferred in
accordance with this paragraph, the holder will
cause to be surrendered to the Issuer, for no
additional consideration, all Common Equity
(including any additional Common Equity issued with
respect thereto as set forth on Annex C) issued
pursuant to the terms of the Transaction.
Mandatory Redemption: On the eighth anniversary of the date of issuance.
Exchange Rights: Holders of Series B Preferred may elect to exchange
their interests in the Series B Preferred for shares
of THCR Common Stock by giving notice of such
election to the Issuer at any time during the 30 day
period after the fourth anniversary of the date of
issuance. The number of shares of THCR Common Stock
issued in such exchange will equal the quotient
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(rounded to the nearest whole number) obtained by
dividing (i) the aggregate liquidation preference of
the Series B Preferred being exchanged (including
accrued and unpaid dividends/distributions) by (ii)
the Current Market Price (as hereafter defined). The
"Current Market Price" shall mean the average of the
closing prices for the THCR Common Stock on the New
York Stock Exchange for the 20 trading day period
commencing on the eleventh trading day after the day
the notice of exchange is issued. In the event that
THCR is required to issue to the holders of the
Series B Preferred in all such exchanges effected
pursuant to the terms described herein any number of
shares of THCR Common Stock in excess of 8,500,000
(subject to anti-dilution provisions to be agreed
upon by the parties) (the "Excess Shares"), THCR
shall have the option to issue the Excess Shares or,
alternatively, cash or a newly issued series of
Preferred Stock of THCR having the value of the
Excess Shares. The Preferred Stock of THCR shall
have such terms as shall be mutually agreed upon by
the parties. The shares of THCR Common Stock issued
pursuant to the exchange shall be subject to
registration rights on terms to be mutually agreed
upon by the parties.
Voting Rights: None.
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Transferability: Transfers of any Series B Preferred will be subject
to the provisions of the Stockholders Agreement
described on Annex E of the letter agreement to
which this Annex is attached.
Warrants: The Series B Preferred will be issued with warrants
to purchase an aggregate of 1,000,000 shares of THCR
Common Stock (subject to anti-dilution provisions to
be agreed by the parties) on the terms described in
Annex D to the letter agreement to which this Annex
is attached.
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ANNEX C
Common Equity
Summary of Terms
Issuer: The Issuer.
Issue Date: The Closing Date.
Amount of Common Equity: 51% of the outstanding Common Equity as of the date
of issuance.
Additional Common Equity: If EBITDA of the Casino-Hotel is less than $70
million for the calendar year ending December 31,
2001, then the Purchaser will receive, in the
aggregate, additional Common Equity representing an
additional 1% for each $1 million by which EBITDA is
less than $70 million; provided, however, that the
total Common Equity issued under this provision
shall not exceed 19%. "EBITDA" will be computed on
the basis set forth in the historical financial
statements of TCA, which have been prepared in
accordance with GAAP. Such agreement to issue
additional Common Equity will terminate upon a sale
of the Casino-Hotel or all or substantially all of
the equity interests therein, and shall not apply
during any year in which THCR Holdings does not have
operational authority over the conduct of the
business of the Casino-Hotel pursuant to the terms
of the Stockholders Agreement.
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Voting Power: 51% of outstanding voting power.
Transferability: Transferability of the Common Equity will be subject
to the terms of the Stockholders Agreement.
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ANNEX D
Warrants
Summary of Terms
Issuer: THCR.
Number of Warrants: The Purchaser will receive with the issuance of the
Securities on the Closing Date, warrants to purchase
an aggregate of 2,000,000 shares of THCR Common
Stock.
Exercise Price: $15.00 per share (subject to anti-dilution
provisions to be agreed upon by the parties).
Period of Exercise: The Warrants will be exercisable on or before the
seventh anniversary of the date of issuance.
Registration Rights: The THCR Warrant and the shares of THCR Common Stock
issuable upon the exercise thereof shall have
registration rights on terms to be mutually agreed
upon by the parties.
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ANNEX E
Stockholders Agreement
Summary of Terms
Parties: The Purchaser and THCR Holdings (the "Original
Stockholders"), the Issuer and any permitted
transferee of the Original Stockholders.
Governance: A five member Board of Directors or similar
governing body (the "Board"). For as long as the
Purchaser and its affiliates hold a majority of the
Common Equity, the Purchaser will be entitled to
appoint three members of the Board (the "Purchaser
Representatives"). For as long as THCR Holdings and
its affiliates hold at least 20% of the Common
Equity, THCR shall be entitled to appoint two
members of the Board (the "THCR Representatives").
Board decisions will be by majority vote, except
that (i) the approval of the THCR Representatives
will be required for the Specified Actions (as
defined below), (ii) Trump will be entitled to
control the day-to-day operational management of the
Casino-Hotel on terms to be set forth in the
Stockholders Agreement or a management or similar
agreement (and that will be sufficient so as to not
trigger a "Change in Control" under the terms of the
Castle Indentures) and (iii) subject to the terms of
the Definitive Agreements, the THCR Representatives
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will have the authority to cause the Issuer to
redeem the Series A Preferred and Series B Preferred
and to obtain any related financing. Donald J. Trump
will be appointed the Chairman of the Issuer and
Nicholas L. Ribis will be appointed the Chief
Executive Officer of the Issuer.
Specified Actions: A change in the chief executive officer, chief
operating officer or chief financial officer of the
Casino-Hotel; the issuance of additional equity
interests in the Issuer; any material transaction
with an affiliate of the Purchaser; the filing of a
bankruptcy petition; the incurrence of indebtedness
(as shall be determined by the parties in the
Definitive Agreements) or contractual restriction
that would limit the ability of the Issuer to redeem
the Series A Preferred or Series B Preferred. Any
sale of the Casino-Hotel substantially as an
entirety shall be subject to the receipt by THCR
Holdings of a fairness opinion satisfactory to THCR
Holdings with respect to the financial terms of such
sale.
Transactions with Other The parties will recognize that certain synergies
THCR Casino Affiliates: will continue to be present from the affiliated
status of the Casino-Hotel and the other casino and
hotel properties owned and operated by THCR
Holdings. Accordingly, the parties will seek to
continue to take advantage of synergistic
opportunities (e.g., in purchasing and other areas)
in a manner that fairly and equitably allocates
opportunities and benefits among the Casino-Hotel
and such other properties.
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Restrictions on Transfer: Right of first offer and tag-along and drag-along
rights, the terms of which shall be mutually agreed
upon by the parties.
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ANNEX F
Securities Purchase Agreement
Summary of Terms
Purchase and Sale: The Purchaser will purchase the Securities for an
aggregate cash purchase price equal to $125,000,000.
Use of Proceeds: Subject to the receipt of the required consents and
the terms and provisions of the Definitive
Agreements, the proceeds received from the sale of
the Securities will be used for the purpose of
re-theming the Casino-Hotel with a "Trump Marina"
theme, financing an expansion of hotel and gaming
space at the Casino-Hotel and, to the extent
required and permitted under the Definitive
Agreement, funding ongoing working capital needs of
TCA.
Representations and Corporate organization; subsidiaries;
Warranties of THCR/TCA: capitalization; financial statements; absence of
certain changes or events; no conflict or violation;
consents and approvals; litigation; taxes; real
property; tangible personal property; contracts and
leases; compliance with laws; environmental matters;
employee benefit plans; brokerage; and other
representations customary for transactions of this
type.
<PAGE>
Representations and Corporate organization; subsidiaries; no conflict or
Warranties of violation; consents and approvals; brokerage;
the Purchaser: sophisticated purchaser; and other representations
customary for transactions of this type.
Covenants: Conduct of business pending Closing; further
assurances; best efforts to obtain licenses and
secure consents; confidentiality; and other
covenants customary for transactions of this type.
Conditions to Closing of Representations and warranties correct; compliance
THCR/TCA: with agreement; no injunction; third-party consents
and approvals obtained; governmental and regulatory
approvals; customary opinions of counsel; and other
Closing conditions customary for transactions of
this type.
Conditions to Closing of Representations and warranties correct; compliance
the Purchaser: with agreement; no injunction; third-party consents
and approvals obtained; governmental and regulatory
approvals; customary opinions of counsel; and other
Closing conditions customary for transactions of
this type.
Fiduciary Out: Fiduciary out customary for transactions of this
type, subject to the provisions of paragraph 6 of
this Letter of Intent.
2
<PAGE>
EXHIBIT A
[Press Release of THCR]
<PAGE>1
EXHIBIT 99.2
------------
FOR IMMEDIATE RELEASE
For more information contact:
Nicholas L. Ribis (212) 715-7204
TRUMP HOTELS & CASINO RESORTS ANNOUNCES JOINT VENTURE
WITH COLONY CAPITAL, INC. FOR TRUMP'S CASTLE
NEW YORK, January 20, 1997 -- Trump Hotels & Casino Resorts, Inc.
(NYSE:DJT) and Trump Hotels & Casino Resorts Holdings, L.P. announced that they
have signed a letter of intent to form a joint venture partnership with Colony
Capital, Inc. to invest $125 million to fund the expansion and retheming of
Trump's Castle, according to Nicholas L. Ribis, president and chief executive
officer.
Colony Capital, a real estate investment firm based in Los Angeles, intends to
invest $125 million in Trump's Castle, through the purchase of a 51% equity
interest in Trump's Castle. Trump Hotels & Casino Resorts Holdings will retain a
49% interest in Trump's Castle and will continue to manage the property. The
current Trump's Castle debt of $314 million will be deconsolidated from Trump
Hotels & Casino Resorts' balance sheet upon completion of the transaction.
Donald J. Trump, chairman of the board, commented, "The soon to be Trump Marina
is a truly unique property located in the Marina District, the future site of
great development projects. It is the only casino hotel located on the marina
waterfront, highlighted by its 645 slip marina, the East Coast's largest. We are
very proud that we can offer such a beautiful venue to our customers."
Ribis said, "We plan to use the proceeds of this transaction to provide the
necessary resources to continue the retheming to Trump Marina, which we have
already begun, and to more than double our room base from 728 to 1,500. This
strategic transaction strengthens our balance sheet and provides for future
benefits, which further our goal of increasing long-term shareholder value."
The consummation of the transaction is subject to, among other things, the
execution of definitive agreements and the receipt of certain consents and
approvals.
Trump Hotels & Casino Resorts, Inc. owns and operated Trump Plaza Hotel &
Casino, Trump Taj Mahal Casino Resorts and Trump's Castle Casino Resort in
Atlantic City, NJ, as well as Trump Indiana, the riverboat casino at Buffington
Harbor, IN, on Lake Michigan.
<PAGE>2
## ## ##
<PAGE>
EXHIBIT 99.3
FOR IMMEDIATE RELEASE
For more information contact:
Nicholas L. Ribis (212) 715-7204
TRUMP HOTELS & CASINO RESORTS FILES 8-K
ON PROPOSED CASTLE JOINT VENTURE TRANSACTION
WITH COLONY CAPITAL
NEW YORK, January 22, 1997 -- Trump Hotels & Casino Resorts, Inc. (NYSE: DJT)
today filed a Form 8-K with the Securities and Exchange Commission regarding the
terms of its letter of intent with Colony Capital to form a joint venture. The
joint venture provides for Colony to invest $125 million in the Trump's Castle
in Atlantic City to be used to fund the expansion and retheming of Trump's
Castle.
In its 8-K filing, the Company provided the following details regarding the
transaction:
o Colony's investment in the form of $62.5 million Series A Cumulative
Preferred Equity and $62.5 million Series B Cumulative Preferred
Equity, both with a dividend rate of 15% payable semi-annually and
maturing in eight years. The Series A is senior to the Series B.
o Colony also receives 51% of the common equity in the Trump's Castle and
three of five seats on the Board of Directors of Trump's Castle. Trump
Hotels & Casino Resorts Holdings, L.P., retains the remaining 49% of
the equity, and Donald J. Trump and Nicholas L. Ribis will continue to
serve as chairman and chief executive, respectively. Trump Hotels &
Casino Resorts will control the day-to-day operational management of
the Casino-Hotel.
o Trump Hotels & Casino Resorts has the option, within the first four
years, to repurchase the preferred stock at a price equivalent to a 25%
annually compounded rate of return, but with a minimum nominal profit
to Colony of $50 million if redeemed within 18 months of the date of
issuance.
o Colony will have the right, at the end of four years, to exchange the
Series B Cumulative Preferred equity (plus accrued dividends) for DJT
common stock (with a maximum of 8.5 million shares) and preferred stock
or cash, if needed.
o Upon completion of the transaction - or if the company pursues an
alternative investment with a third party under certain circumstances -
Colony will receive warrants for 2 million shares of DJT common stock
at a strike price of $15 a share.
Trump Hotels & Casino Resorts said both sides would move toward signing of a
definitive agreement by April 15.
<PAGE>2
Trump Hotels & Casino Resorts, Inc. owns and operates Trump Plaza Hotel &
Casino, Trump Taj Mahal Casino Resort and Trump's Castle Casino Resort in
Atlantic City, NJ, as well as Trump Indiana, the riverboat casino at Buffington
Harbor, IN, on Lake Michigan.
###
