Bankrupt Billionaire – Part II

The following is an excellent excerpt from the book “LOST TYCOON: The Many Lives of Donald J. Trump” by Harry Hurt III from Part Three: “Best Sex Ever Had” from Chapter 10: “Bankrupt Billionaire” on page 320 and I quote: “On the afternoon of Thursday, May 31, a platoon of twenty-five bankers and attorneys, representing Citicorp, Manufacturers Hanover Trust, Bankers Trust, and Chase Manhattan, marches into Trump Tower.  They are on their way to a secret meeting with Donald.  He has called them, not the other way around.  The purpose of the meeting is to discuss Donald’s $2 billion in current bank debt and the upcoming Trump Castle bond payments the casino has told the SEC it cannot make on schedule.

Donald ushers in the bankers and their attorneys into his twenty-sixth-floor conference room.  He tries to appear relaxed and confident.  Remarkably there seems to be very little hostility or anxiety on either side of the table.  The only glaring irony visible to all in attendance is a scale model of the stillborn TV City / Trump City project Donald wants to build on his West Side yards property.

“Everything is fine,” Donald tells his bankers.  “I’ve got these wonderful casinos, and the Taj is doing great.  I’ve just got a temporary liquidity problem.”

This “temporary liquidity problem,” he explains, results from the fact that certain “capital events”–namely the sale of the Trump Princess and his attempts to sell a stake in the Plaza Hotel–have been developing much more slowly than he anticipated.  For that reason, he tells them, he would like to borrow enough money to make Trump Castle’s $45 million bond payment in June and a little bit extra to tide him over until he can effect the aforementioned “capital events.”  In other words, he wants to buy time.

At first the bankers are not overly concerned.  “We need more information to construct a solution,” offers a representative from Citicorp.  Donald is happy to oblige.  Still affecting an air of confidence, he has pastries and coffee served on the expansive mahogany conference table.  He stands behind his chair with both hands on its back, cracks a few jokes, then pops in and out of the room to attend to other business.  For the most part, he lets surrogates such as financial adviser Harvey Freeman talk specifics.

As the negotiations wear on into the night, however, the mood in the room grows increasingly serious.  Donald insists that making Trump Castle’s bond payment is crucial to maintaining confidence in the bond markets.  The bankers have no problem seeing the logic of that assertion.  But they will not lend him more money to pay bond market creditors until he ensures that they will also be paid back.

Donald knows that his lenders have a figurative gun to his head.  They can always call in his loans, demanding that he pay up immediately.  He and his bankers also know, however, that such a move could trigger his financial collapse, leaving the banks with assets they are not equipped to operate as going businesses or sell off for enough money to recoup their loans.  Donald proposes a potential solution.  He offers to give the banks major stakes in the Plaza Hotel and the Grand Hyatt if they, in return, will agree to reduce the amount of his debt proportionately.

The banks reject Donald’s offer out of hand.  As one participant later confides, they are not sure that the assets he is offering them can later be sold “for anything like what [Donald] says they are worth.”  The banks are also unimpressed by the capabilities of the Trump management teams and aghast at the extravagance of Donald’s life-style, especially the cost of maintaining his private jet, helicopter, and yacht, which collectively total more than $2 million a year.

At 8:30 P.M. Donald departs for Atlantic City to attend a boxing match.  By then it is becoming clear to everyone in the conference room that the so-called artist of the deal is in deep trouble–and so are his bankers.

“Donald J. Trump’s cash shortage has become critical,” the Wall Street Journal announces on Monday, June 4 in a front-page story by staff writer Neil Barsky.  “The developer is now in negotiations with his main bank creditors that could force him to give up big chunks of his empire.

“At a minimum” Barsky continues, “Mr. Trump is likely to face a humbling change in his business and personal style, bankers involved in the talks say.  ‘He will have to trim the fat; get rid of the boat, the mansions, the helicopter,’ one banker in the talks asserts.  The banks are also likely to push for some asset sales, for some management changes and for a much more conservative operating style at Mr. Trump’s principal holding company, Trump Organization.

“It remains possible that Mr. Trump can find a way to retain all of his properties,” Barsky points out.  “Many are quite valuable, and it is conceivable the banks could be persuaded to simply lend Mr. Trump more money, to give him time to improve his cash-flow situation on his own.”  But on the basis of discussions with his confidential sources in the bank negotiations, Barsky concludes: “Such a hands-off approach is unlikely. . . .”

Then there is the matter of Donald’s ongoing marital battle with Ivana.  “It is unclear what portion of his empire could be claimed by his wife in any future divorce action,” Barsky notes.  “People close to Mr. Trump say he intends to ask for a major reduction in the $25 million he previously agreed to pay his wife in the event of a divorce.  She is challenging the prenuptial agreement, seeking a higher figure.”

The implications of the Wall Street Journal story, which provides the first confirmation of Donald’s banking crisis, are truly staggering.  Just eight months ago Forbes estimated Trump’s net worth at $1.3 billion; the magazine’s revised estimate just five weeks ago placed his net worth at $500 million.  Now the man who had claimed to be intent on becoming “king of cash” appears to be on the verge of financial collapse.

How did Donald’s wealth dissipate so fast?  As he and a few top-ranking members of the Trump Organization have known for years, it was never there.

On the morning of Monday, June 4, the same day the Wall Street Journal sounds the alarm about the Trump empires banking crisis, a record crowd of more than three thousand people jam the Las Vegas Hilton for a Book and Author Breakfast sponsored by the American Booksellers Association.  The featured speakers that morning are novelist T. Coraghessan Boyle, actress Angela Lansbury, who portrays suspense novelist Jessica Fletcher on the popular television series “Murder, She Wrote,” and the real star attraction, Donald J. Trump.

“Donald Trump has literally put his name on the line with success,” the former ABA president Ed Morrow informs the audience.  “We also know that Trump as the author is one of the great bestsellers of our time.  The Art of the Deal, which was published in 1987, sold over a quarter of a million copies in the weeks between Christmas and Thanksgiving.  It was still a best seller the following Christmas, netting over 900,000 copies with virtually no returns. . . . The paperback was similarly a big hit.

“Mr. Trump is now ready with a new book,” Morrow continues, “and I have been assured that in characteristic fashion he plans to outdo himself.  Trump: Surviving at the Top, to be published in October by Random House, will be full of absorbing business stories, guidelines for success and revealing insights on the challenges and dangers of life at the top.  All told with his inimitable verve and candor.  So, join me in welcoming Donald J. Trump. . . . ”

Donald takes the podium amid a crescendo of applause and speaks with what almost approaches modesty.  “I am getting the worst press right now–unbelievable.”  He sighs.  “And Joni [Evans of Random House] says to me, ‘Donald, the book is going to be so hot.’  And I said, ‘Hot? I’m getting the worst press in the world.’  And she said, ‘Yeah, but that makes it hotter.'”

Donald says he asked Random House editor Peter Osnos to delay publication for at least a year, so “I’ll know how good the Taj Mahal is going to be.  I’ll know about whether my victory over Merv Griffin was totally decisive and devastating. . . or just partially devastating.”  But according to Donald, the reception he has received at the ABA convention has changed his mind.  He then tries to reassure the assembled booksellers of his continuing commercial appeal by treating them to an excerpt from Trump: Surviving at the Top, the manuscript in progress coauthored by Newsweek staffer Charles Leerhsen.  The theme of the passage is “on toughness”:

“Toughness is pride, drive, commitment and the courage to follow through on things you believe in even when they are under attack.  It is solving problems instead of letting them fester.  It is knowing who you really are even when society wants you to be somebody else.  Toughness is knowing how to be a gracious winner and rebounding quickly when you lose.

I’m never satisfied–which is my way of saying there’s a great deal I still want to do and believe I should do.  Some people are always saying that I can’t go on like this forever, and that I’m at the beginning of the end.  I’d rather see myself as being at the end of the beginning.”

After reading the passage, Donald confides out loud: “I may have to end some chapters with a question mark.  I may have to end the whole book with a question mark.”

Back in New York City that same morning the Trump Organization releases an unusually terse statement in response to the Wall Street Journal article about Donald’s cash crisis.  It sounds as if it came from a third world debtor nation rather than from a swashbuckling American tycoon.  “We are meeting with major banks,” the statement says, “. . . and are confident we will arrive at a mutually beneficial solution.”

Trump spokesman Howard Rubenstein adds a equally sobering statement about the impact on Donald’s nuptial contract dispute with Ivana.  According to Rubenstein, the money he has promised to pay her under the contract is just “too much” for him to afford at the present time.  Donald has therefore requested a meeting with Ivana’s attorneys to discuss a downward revision of the agreement.

Not to be left out, Marla Maples also feels compelled to make a public statement.  “She is very concerned and supportive,” reports her publicist, Chuck Jones.

The local and national media do not share Marla’s sentiments.  Having cheered Trump’s rise, they delight in jeering at his demise.  On June 5, the day after the Wall Street Journal story about Trump’s cash-flow crisis the New York Daily News runs a front-page headline announcing TRUMP ON A SLUMP.  The New York Post counters with the front-page pun UH-OWE!  On the following Monday a photograph of Donald grimacing with head in hand appears on the cover of Newsweek magazine along with the headline TRUMP: THE FALL.

New York Daily News columnist Gail Collins takes the early lead in the media’s Trump-bashing backlash.  “I am only sorry that Unity Day is over,” Collins writes in her paper’s June 5 edition.  “We are about to have one of those magic New York moments when people of all creeds, races and economic backgrounds join together in a single thought: Hehehehehehe.

Interviews with average citizens on the street prove that Collins is not alone in shedding crocodile tears over Trump’s financial troubles.  “I am crying my eyes out for the next hundred years!”  Wardell Striggles, a Bronx native who sells cassette tapes on the corner of Third Avenue and Forty-third Street in Manhattan, informs the Daily News.  “I may have to go home I’m so upset by this terrible news!”

“I really don’t care about Donald Trump and his money problems,” says Robert Williams, Jr., an African-American assistant store manager.  “However, I’ve read that his wife is running up a lot of bills that Donald must pay.  That’s great.”

Whatever his problems, I’d take them, including Marla Maples,” says financial consultant Randolph Rawiszer.  “If he needs the financial advice, he or Marla can give me a call.  Actually, I’m divorced.”

Donald’s creditors do not take the situation so lightly.  On June 5 a group of Trump Plaza and Trump Castle casino bondholders file a class-action suit accusing him of fraud and securities law violations.  The bondholders allege that Donald has leaked “confidential” lists of Plaza and Castle high-roller gambling customers to the newly opened Taj Mahal in order to promote the Taj “at the expense” of his other two Atlantic City casinos.  In addition to seeking an unspecified monetary damage judgment, the bondholders’ suit asks that Donald be enjoined from using the allegedly invaluable customer lists to benefit the Taj.

By now Donald’s no longer secret behind-the-scenes negotiations are turning grim.  His bankers and their attorneys adjourn the cozy powwows in the conference room at Trump Tower and commence bitterly divisive caucuses in law firms and branch offices all over town.  Donald is not invited to the meetings ostensibly because they are creditor-to-creditor negotiations.  But despite protestations to the contrary, the banks are beginning to regard him as persona non grata.  They now realize that their slick-talking star borrower has misled them about the true severity of his cash squeeze.

The bankers on the Trump workout teams are even more upset at their own real estate lending departments.  They cannot really fault Donald for borrowing whatever he could get.  But they do fault their lending department colleagues for giving so much money to him in exchange for such weak collateral.  Soon heads will roll in the real estate departments of Citibank, Chase, and Manufacturers Hanover as slews of vice-presidents are fired for incompetence.  In the interim the banks’ workout teams are determined to attach liens to every valuable property in the Trump portfolio, including, if possible, whatever nest egg Donald stands to inherit from his old man.

Ivana Trump parades through the paparazzi-packed lobby of the Waldorf-Astoria as if she owns the place.  It is precisely 6:15 P.M. on Wednesday, June 6, and she is due to be a presenter at the Fragrance Foundation awards ceremony.  She wears a full-length beaded satin ball gown appropriately dyed mint green like the color of money, and she has her gold-tinted hair swept up in the Bardot bun styled for the Vogue cover shoot.  When she reaches the Jade Room, the sound of her name echoes over the high-speed clicking of motor-driven cameras.

“Ivana!  Ivana!  Ivana!”  shout the assembled photographers, clamoring for her to look their way.

Ivana slashes a professional smile and beckons to pear-shaped designer Arnold Scaasi.  “Come on, Arnold!  Pose with me!  Come on!”  Scaasi, who used to live in the strife-torn rent-controlled apartment building The Donald owns at 100 Central Park South, waddles over obediently.  In years past Scaasi has benefited from the promotional value afforded by Ivana’s patronage of his fashion lines.  Now, as a woman soon to be all on her own, she needs Scassi to stand beside her as he once needed her.

As Ivana chats with Scaasi and cosmetics queen Estee Lauder, a CBS News correspondent shoves a microphone in her face and asks her to comment on reports of The Donald’s cash-flow crunch.  Ivana cannot believe that her husband is really going broke.  She privately suspects that The Donald’s sudden financial crisis is another one of his stunts, a ploy to avoid paying her what she is due under their nuptial contract.  But she is determined to remain above the fray.

“Donald and I are partners in marriage and in business,” Ivana tells the CBS correspondent in an obviously rehearsed reply.  “I will stand beside him through thick and thin and for better or worse.”

Even so, Ivana is not about to relinquish her claims on the family fortune.  Her publicist, John Scanlon, made that perfectly clear in a statement released to the press the previous day.  “Mrs. Trump obviously is only interested in a healthy Trump empire since she believes she and her children are entitled to half its value,” Scanlon said.  But he added that Ivana is not going to allow her husband to renege on their nuptial contract.  As Scanlon archly observed, “Not even Donald Trump can simultaneously have a contract both rescindable and ironclad.”

Ivana intends to fend for herself in The Donald’s own tradition by licensing the one major asset she has left: her name.  After charming the paparazzi buzzing about the Fragrance Foundation dinner crowd, she seats herself at a table hosted by Eugene Grisanti, chairman of International Flavors & Fragrances.  It is, as Grisanti later acknowledges, “an open bulletin” that he and Ivana will soon commence negotiations with the William Morris Agency about writing romans `a clef loosely based on her own life story.

But the Donald still has his hooks in her.  The day before the Wall Street Journal broke the news of his bank negotiations, Ivana went to the Plaza Hotel for the wedding of her fashion executive friend Martha Kramer and Sulka apparel company president Neal J. Fox.  When popular singer Neil Sadaka serenaded the bride and groom with a new song about a lonely man who finds love, Ivana started sobbing uncontrollably.  Her table mate Paul Hallingby, president of Bear Stearns, put his arm around her heaving shoulders.  But Ivana kept on crying.  By the time Sedaka segued into his hit song, “Laughter in the Rain,” all the other women at the tale–Hallingby’s wife, Mai, and socialites Laura Pomerantz and Joan Schnitzer–were crying, too.”

(THE FOLLOWING IS FROM THE INSIDE JACKET COVER AND I QUOTE:

“Perhaps Donald Trump really was the Colossus of the 1980s: a larger-than-life symbol of success whose preeminence in the world’s toughest arena inspired awe, envy, and loathing.  Today, the Trump empire of hotels, high-rises, and casinos lies mired in prepackaged bankruptcy, and Donald’s private life has become as scandulous as a prime-time soap opera.

Harry Hurt’s irresistibly readable biography begins with a riveting snapshot, a day the life of Donald, Ivana, and Marla Maples on October 10, 1989.  On this day, a little after noon, a rented helicopter will crash on the way to Atlantic City, killing three top executives in Trump’s casino operation.  Donald is already in over his head personally and financially: the affair with Marla is beginning to leak to the press and will shortly blow his marriage to kingdom come; in Atlantic City construction of the vast, gaudy, doomed albatross known as the Trump Taj Mahal drags on.  The death of the casino executives is a blow from which the empire cannot recover, and Donald will make matters worse by concocting a lie for publicity purposes–that he had planned to ride to Atlantic City in the fated helicopter, and thus narrowly escaped death.”

LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veteran

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About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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