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Atlantic City Round Up

9 December 2001

by Joe Weinert

ATLANTIC CITY -- Dec. 9, 2001 -- Donald Trump backed down from his Halloween threat and agreed to pay bondholders $91 million in overdue interest payments.

Trump, chairman and CEO of Trump Hotels & Casino Resorts, had said he would withhold all due interest until bondholders agreed to concessions such as lower rates and extended maturities. The breaks were needed, he said, due to the economic downturn after Sept. 11 and the ensuing legalization of New York casinos.

Two days before a possible default on one of the bond issues, Trump chose to make the payment "based on the establishment of a bondholders committee for the purpose of good-faith negotiations," the company said.

"It's nice to see that he caved," said one institutional holder of the $1.3 billion in Trump Atlantic City Associates mortgage notes.

"I knew 10 days ago he was going to pay," said Palm Beach, Fla., investor Daniel Borislow, who owns more than $30 million of the $242.1 million in Trump's Castle Associates notes. "I think it was a gut reaction (by Trump) to New York passing that legislation. I think it was somewhat impulsive on his part to do what he did. In retrospect, he probably wished he didn't."

Trump was unavailable for comment.

Bondholders and Trump will spend the next five months negotiating new terms. Any such agreement likely would go through a prepackaged bankruptcy reorganization.

"Things will have to be hashed out over the next couple of months. Hopefully we can get to point where we don't have to deal with this any more," said one member of an ad hoc committee that represents more than half of the $1.3 billion bond issue.

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The likely next general counsel of Park Place Entertainment hit a snag in her application for a New Jersey gaming license.

The Casino Control Commission referred the application of Kim Sinatra, now senior vice president and deputy general counsel, to a hearing despite a recommendation by the New Jersey Division of Gaming Enforcement that she be approved.

Although regulators would not comment on the matter, a Park Place official did.

"In its recommendation, the Division referenced a defect in the formal completion of Ms. Sinatra's divorce in 1992 prior to her marriage that year to her current husband," company spokesman Robert Stewart said.

"In recommending qualification for Ms. Sinatra, the Division noted that the events in question occurred nearly 10 years ago, that the defect has been rectified, that no one was misled, defrauded or injured and that there was no effort to conceal the matter," Stewart said.

Sinatra, 41, is expected to succeed Clive Cummis, 73, as general counsel when or before his contract expires at the end of next year.

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A Harrah's Entertainment marketing consultant lost his New Jersey gaming license after regulators found that he took $20,000 from an indebted Indonesian high roller in Hong Kong three years ago.

The Casino Control Commission unanimously voted to revoke the license of Ben Vuong, who was then a player host for Trump Taj Mahal.

Vuong lawyer Guy Michael criticized the hearing examiner's initial decision, saying it was based on accusations by a high roller, Rudy Gunawan, who refused to give sworn interviews. Vuong denied any wrongdoing.

The Division of Gaming Enforcement said Vuong was not credible and that he left behind an incriminating paper trail.

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The five-member Casino Control Commission will be short- handed for an undisclosed period with the departure of Susan Maven.

Maven, the only Atlantic City resident on the regulatory panel, finished her five-year term and is expected to receive a judgeship.

With a change to a Democratic governor next month, the seat is expected to stay vacant for months.

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New Jersey regulators have received no reports of glitches affecting some WMS Industries slot machines, a the head of the Division of Gaming Enforcement slot lab said.

Deutsche Bank analysts Mark Mutkoski and Joel Simkins downgraded WMS stock after slot managers in Mississippi and Nevada told them that some new games either lock up or reward gamblers with extra credits.

WMS slots were plagued with different glitches last spring. It affected 2,500 Atlantic City slot machines and led to a $110,000 regulatory fine from the Michigan Gaming Control Board.

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