Trump Hotels creditors agree to recapitalization

Trump Hotels & Casino Resorts Inc. said it struck a deal with shareholders who had objected to the company's recapitalization plan. Under the agreement, the company would make a $17.5 million cash payment to common stockholders (other than Mr. Trump), and stockholders would receive options to purchase up to 5.3% of the company.

Equity holders had blasted Trump's recapitalization plan as a sweetheart deal for the developer, whose casino company filed for bankruptcy protection in November.

Under the agreement, the World's Fair site would be sold at auction once the company's recapitalization proceedings are completed, with the net proceeds going to the common stockholders.

The U.S. Office of the Trustee says the firm used a financial adviser, UBS Securities, that has a conflict of interest: It is reportedly the former employer of Trump Hotels President Scott Butera.

In addition, DLJ Merchant Banking objects to the plan, claiming that it overlooks a $25 million breakup fee it is owed.

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