EXHIBIT 99.17(B)(2)(ii)
[LOGO]
[LOGO OF ROTHSCHILD INC.] TRUMP
TAJ MAHAL
CASINO . RESORT (TM)
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DISCUSSION MATERIALS UPDATE
FOR
THE BOARD OF DIRECTORS
OF
TAJ MAHAL HOLDING CORP.
Confidential
The information contained herein has been prepared and compiled from
publicly available sources, Trump Hotels & Casino Resorts, Inc., and Taj Mahal
Holding Corp. and is intended exclusively for discussion purposes. Neither
Rothschild Inc. nor any of its officers, directors, employees, affiliates or
agents makes any representation or warranty as to the accuracy or completeness
of any materials contained herein.
January 26, 1996
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ROTHSCHILD INC.
Rothschild Inc. Confidential
PROJECT WONDER
Table of Contents
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Section 1 Transaction Summary
Section 2 Transaction Considerations
Section 3 Proforma Merger Analysis
Rothschild Inc. Confidential
PROJECT WONDER
Transaction Summary
(dollar amounts in millions except per share data)
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. Merger of Gem into THCR ("Merger Transaction").
. Gem's Class A shareholders receive $30.00 per share in cash or in THCR
shares.
. At a $20.75 THCR share price (1/25/96 market close), exchange ratio of
1.45 shares per Class A share.
. Donald Trump ("DJT") receives:
. Restricted shares which when valued at the full trading price of
unrestricted stock would equate to $30.00 per share in THCR shares and,
. Master warrant to purchase 1.8 million shares in THCR. This warrant will
not be transferable and will entitle DJT to purchase 600,000 shares at
$30.00 per share for 3 years, another 600,000 shares at $35.00 per share
for 4 years, and a third 600,000 shares at $40.00 per share for 5 years.
The warrant will be acquired "for investment" and DJT's registration
rights will be limited to the underlying shares of the common.
- Based on an Equity Offering up to $140.0 (at an assumed price of $20.75
per share) and a Debt Offering up to $1,200.0, and assuming the
exercise of the warrant, proforma ownership approximately 35%.
-1-
Rothschild Inc. Confidential
PROJECT WONDER
Transaction Summary
(dollar amounts in millions except per share data)
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. Gem's Class B shareholders receive $0.50 per share in cash.
. Gem's First Mortgage Bonds redeemed at par plus accrued interest.
. Gem's NatWest Debt redeemed for a maximum of $36.0 in cash ($44.9 face
amount).
. Tender or defease Trump Plaza's 10-7/8% Mortgage Bonds in cash ($330.0 face
amount).
. Issuance up to $1,200.0 of New First Mortgage Notes secured by Gem and Trump
Plaza.
. First Fidelity receives $50.0 in cash and $10.0 in THCR shares in
consideration for the release of guarantee and the purchase of the Realty
Corp.'s specified parcels.
. Banker's Trust receives $10.0 in cash in consideration for its consent to the
Merger Transaction and release of its liens on (i) DJT's direct and indirect
equity investments in TTMA and, (ii) the TTMI note.
. Exercise Trump Plaza East purchase option at an exercise price of $28.0 in
cash.
. Consent solicitation from holders of THCR Holdings/THCR Funding's 15-1/2%
Senior Secured Notes.
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Rothschild Inc. Confidential
PROJECT WONDER
Sources and Uses Summary
(dollar amounts in millions except per share data)
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Sources Uses
- ------- ----
Excess Cash $59.6 Payment to First Fidelity $50.0
New AC Mtg Notes 1,200.0 Payment to Bankers Trust 10.0
New Common 231.0 (1) Redeem Gem's Mtg Bonds 793.7
Redeem NatWest Loan 36.0
Redeem/Defease Plaza Mtg Bonds 378.6 (2)
Exercise Trump Plaza East Option 28.0
Purchase/Exchange A & C shares 81.0
Purchase B shares 0.4
THCR Equity to First Fidelity 10.0
Accrued Interest 37.9
Transaction Expenses 65.0
------- -------
1,490.6 1,490.6
======= =======
(1) Assumes $140.0 million of new equity is sold to the public.
(2) Estimate based on current market conditions; subject to change based on
conditions at time of defeasance and amount of bonds redeemed in connection
with debt tender offer.
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Rothschild Inc. Confidential
PROJECT WONDER
Transaction Value Analysis
(dollar amounts in millions except per share data)
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Equity(1)
Purchase of Class A, B, C Shares $83.7
Redemption of Debt and Other Obligation $889.7
Assumption of Debt 0.6
THCR Equity to First Fidelity 10.0
Transaction Expenses 40.0 (2)
Less: Excess Cash (59.6)
Total Transaction Value $964.4
======
Transaction Value as a multiple of:
-----------------------------------
1995E Proforma EBITDA 141.3 (3) 6.83 x
1996F Proforma EBITDA 161.4 (3) 5.98
1995E Proforma EBIT $97.4 (3) 9.90 x
1996F Proforma EBIT $107.1 (3) 9.00
(1) Includes warrant issued to DJT valued at low end of Rothschild valuation
range.
(2) Amount allocated to Gem acquisition.
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Rothschild Inc. Confidential
PROJECT WONDER
Valuation Matrix
(dollar amounts in millions except per share data)
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Transaction Value as a Multiple of:
----------------------------------
Class A Class B Class C (a) (b)
Stock Stock Stock Offer Transaction LTM 1995E 1996F 1995E 1995E
Price Price Price Value Value EBITDA EBITDA EBITDA EBIT Revenues
------- ------- ------- ----- ----------- ------ ------ ------ ----- --------
$25.000 $0.500 $25.000 $70.2 $950.9 6.48 x 6.73 x 5.89 x 9.76 x 1.71 x
25.500 0.500 25.500 $71.5 952.3 6.49 6.74 5.90 9.78 1.71
26.000 0.500 26.000 $72.9 953.6 6.50 6.75 5.91 9.79 1.72
26.500 0.500 26.500 $74.2 955.0 6.51 6.76 5.92 9.80 1.72
27.000 0.500 27.000 $75.6 956.3 6.52 6.77 5.93 9.82 1.72
27.500 0.500 27.500 $76.9 957.7 6.53 6.78 5.93 9.83 1.72
28.000 0.500 28.000 $78.3 959.0 6.54 6.79 5.94 9.84 1.73
28.500 0.500 28.500 $79.6 960.4 6.55 6.80 5.95 9.86 1.73
29.000 0.500 29.000 $81.0 961.7 6.56 6.81 5.96 9.87 1.73
29.500 0.500 29.500 $82.3 963.1 6.56 6.82 5.97 9.89 1.73
30.000 0.500 30.000 $83.7 964.4 6.57 6.83 5.98 9.90 1.73
30.500 0.500 30.500 $85.0 965.8 6.58 6.83 5.98 9.91 1.74
31.000 0.500 31.000 $86.4 967.1 6.59 6.84 5.99 9.93 1.74
31.500 0.500 31.500 $87.7 968.5 6.60 6.85 6.00 9.94 1.74
32.000 0.500 32.000 $89.1 969.8 6.61 6.86 6.01 9.96 1.74
32.500 0.500 32.500 $90.4 971.2 6.62 6.87 6.02 9.97 1.75
33.000 0.500 33.000 $91.8 972.5 6.63 6.88 6.03 9.98 1.75
33.500 0.500 33.500 $93.1 973.9 6.64 6.89 6.03 10.00 1.75
34.000 0.500 34.000 $94.5 975.2 6.65 6.90 6.04 10.01 1.75
34.500 0.500 34.500 $95.8 976.6 6.66 6.91 6.05 10.03 1.76
35.000 0.500 35.000 $97.2 977.9 6.67 6.92 6.06 10.04 1.76
Gem's Proforma Results $146.7 $141.3 $161.4 $97.4 $555.9
(a) After deducting proceeds from the exercise of options and warrants,
if applicable.
(b) Offer value + Net Debt and Other Consideration; includes estimated
transaction expenses.
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Rothschild Inc. Confidential
PROJECT WONDER
Capitalization Summary
(dollar amounts in millions except per share data)
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As of March 31, 1996
-----------------------------------------------------
Proforma Proforma % of
THCR Gem Adjust. As Adjust. Capital.
---- --- --------- ---------- --------
Excess Cash $8.5 $82.9 ($59.6) $31.8 -
Restricted Cash 5.5 25.0 30.5 -
------ ------ ------- -------
Total $14.0 $107.9 ($59.6) $62.3
====== ====== ======= =======
Debt
----
THCR 10.875% Mtg Bonds $330.0 ($330.0) $0.0 0.0%
THCR 15.500% Snr Sec Nts 155.0 155.0 9.6%
THCR Cap Lease & Other 45.2 45.2 2.8%
Gem 11.350% Mtg Bonds 793.7 (793.7) 0.0 0.0%
Gem NatWest Loan 45.5 (44.9) 0.6 0.0%
AC New Mtg Notes 0.0 1,200.0 1,200.0 74.7%
------ ------ ------- ------- -----
Total $530.2 $839.2 $31.4 $1,400.8 87.2%
====== ====== ======= ======= =====
Shareholders' Equity $47.0 $29.0 $130.2 $206.2 12.8%
------ ------ ------- ------- -----
Total Capitalization $577.2 $868.2 $161.6 $1,607.0 100.0%
====== ====== ======= ======= =====
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Rothschild Inc. Confidential
PROJECT WONDER
FY 1996 and FY 1997 Pro Forma Accretion / (Dilution) Analysis
(dollar amounts in millions except per share data)
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Scenario: Class A Share Purchase/ No Gem Expansion
THCR
Standalone FY 1996 FY 1997
---------- ------- -------
Adjusted EPS $1.87 $2.90
1996 1997
---- ----
THCR Price per Share THCR Price per Share
-------------------- --------------------
Pro Forma EPS (1)
Offer
Value $20.750 $22.500 $25.000 $27.500 $30.000 $20.750 $22.500 $25.000 $27.500 $30.000
----- ------------------------------------------------------------------------------------------------
$25.000 $1.19 $1.22 $1.27 $1.31 $1.35 $2.46 $2.53 $2.63 $2.71 $2.79
$30.000 $1.15 $1.19 $1.24 $1.28 $1.31 $2.39 $2.47 $2.57 $2.65 $2.73
$35.000 $1.12 $1.16 $1.20 $1.24 $1.28 $2.33 $2.41 $2.51 $2.59 $2.67
$ Accretion / (Dilution)
Offer
Value
-----
$25.000 ($0.68) ($0.64) ($0.60) ($0.56) ($0.52) ($0.44) ($0.37) ($0.27) ($0.19) ($0.11)
$30.000 (0.71) (0.68) (0.63) (0.59) (0.55) ($0.51) ($0.43) ($0.33) ($0.25) ($0.17)
$35.000 (0.75) (0.71) (0.66) (0.62) (0.59) ($0.57) ($0.49) ($0.39) ($0.31) ($0.23)
% Accretion / (Dilution)
Offer
Value
-----
$25.000 -36.43% -34.47% -31.98% -29.81% -27.88% -15.31% -12.70% -9.39% -6.49% -3.93%
$30.000 -38.29% -36.32% -33.81% -31.60% -29.65% -17.53% -14.89% -11.53% -8.58% -5.97%
$35.000 -40.07% -38.09% -35.56% -33.33% -31.35% -19.64% -16.98% -13.58% -10.59% -7.94%
(1) Excludes the exercise of the THCR warrant and any potential operating
synergies.
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Rothschild Inc. Confidential
PROJECT WONDER
Transaction Considerations
(dollar amounts in millions except per share data)
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. Creates a multi-property gaming enterprise with a dominant presence in
Atlantic City.
. Eliminates DJT's potential conflict of interest among two of his largest
properties.
. Provides Gem's Class A shareholders liquidity through THCR shares or cash.
. Coupon on New First Mortgage Notes should be more favorable relative to the
previously proposed debt offering.
. Blocks of 300,000 and 90,000 shares of Gem's Class A common stock were
recently traded at $22.00 and $22.50 per share (net of transaction costs),
respectively. Currently, shares are being offered at $26.00 per share.
. Payment to Bankers Trust.
. "Cleans up" Gem's equity.
. THCR will not go forward with proposed transaction if Gem is subject to
secured lien on 50% of its equity.
. Bankers Trust will not release lien without being compensated as proposed
in Merger Transaction.
-8-
Rothschild Inc. Confidential
PROJECT WONDER
Transaction Considerations
(dollar amounts in millions except per share data)
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. Termination of Taj Services Agreement.
. Elimination of fees which amounted to approximately $1.9 million, $1.4
million, and $1.6 million during the years ended 1995, 1994, and 1993,
respectively.
. Purchase of Realty Corp.'s parcels.
. Enables Gem to implement expansion plans on property essential to the
entire operation.
. Eliminates $2.7 million annual lease payment.
. Repayment of First Fidelity Loan at a significant discount.
. Gem gains title free and clear of liens and security interests.
. Upon redemption of the NatWest Loan, Realty Corp. would be entitled to
supplemental rent equal to $416,666.67 per month plus an amount equal to
16.5% of the remaining EACF Amount.
. Removes situation where Realty Corp. gains control of improvements on
specified parcels upon expiration of lease.
-9-
Rothschild Inc. Confidential
PROJECT WONDER
Transaction Considerations
(dollar amounts in millions except per share data)
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. Purchase of Realty Corp.'s parcels (continued).
. According to First Fidelity's First Amendment to Amended and Restated Time
Loan Agreement, First Fidelity will release the specified parcels at the
following prices:
- Hutt Parcel: $ 1.0 million
- Social Security Parcel: 4.6 million
- Consolidated Parcel: 5.0 million
- Synagogue Parcel: 3.9 million
- "3.7 acre" Tract: 18.1 million
- "210" Strip: 33.8 million
- Steel Pier: 10.0 million
- Presbyterian Ave. Parcel: 1.8 million
- Kramer Warehouse Parcel: 1.8 million
-------------
$80.1 million
=============
-10-
Rothschild Inc. Confidential
PROJECT WONDER
Transaction Considerations
(dollar amounts in millions except per share data)
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. Purchase of Realty Corp.'s parcels (continued).
. Aggregate release value is significantly above the value being proposed to
First Fidelity in the Merger Transaction.
. Appraisal Group International's March 1994 appraisal indicated current
land prices for casino development ranging from $200 to $300 per square
foot.
- Rothschild estimates the present value of the First Fidelity payment
stream and the residual value of Realty Corp.'s land and improvements
ranging from approximately $64 million to $85 million.
. Exercise of Trump Plaza East Purchase Option.
. Elimination of $3.1 million annual lease payment.
. Termination Right - THCR Common Stock.
. THCR: market value of the THCR Common Stock shall be $20.00 or more.
-11-
Rothschild Inc. Confidential
PROJECT WONDER
Transaction Considerations
(dollar amounts in millions except per share data)
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. Gem's First Mortgage Bonds taken out at par plus accrued.
. Refinancing provides extension of maturity.
. Provides flexibility for expansion of Gem, which otherwise would not be
allowed under the existing indenture unless a bondholder consent is given.
. Elimination of the cash sweep mechanism on the public bonds.
. Elimination of future payments in-kind.
. Gem's NatWest Loan redeemed at a significant discount to face.
. Obtain potential operational synergies between properties and possible cross-
marketing benefits. Management has identified approximately $18.0-$20.0 in
potential cost savings that may be realized on an annual basis commencing in
the second year following the Merger Transaction.
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Rothschild Inc. Confidential
PROJECT WONDER
Merger Transaction Summary
(dollar amounts in millions except per share data)
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Purchase Price Summary
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Common shares %
Gem Class A 1.35 38.8%
Class B 0.78 22.4%
Class C 1.35 38.8%
------ -----
Total 3.48 100.0%
====== =====
Equity Offering Price
- ---------------------
Class A Class B Class C Fst Fidelity
-------------------------------------------
Cash $0.00 $0.50 $0.00
Debt 0.00 0.00 0.00
Common 30.00 0.00 30.00
------ ----- ------
$30.00 $0.50 $30.00
====== ===== ======
Allocation of Consideration
- ----------------------------
Cash 0.0% 100.0% 0.0%
Debt 0.0% 0.0% 0.0%
Common 100.0% 0.0% 100.0%
Amount of Consideration
- -----------------------
Cash $0.0 $0.4 $0.0 -
Debt 0.0 0.0 0.0 -
Common 40.5 0.0 40.5 10.0
----- ---- ----- -----
Total $40.5 $0.4 $40.5 $10.0
===== ==== ===== =====
THCR exchange ratio 1.45 0.00 1.45 -
Assumed THCR price per share $20.750
THCR Shareholder Profile
Pre-Transaction Post-Transaction
--------------- -----------------
shares % shares %
------ --- ------ ---
Gem Class A - - 1.95 7.0%
Gem Class B - - 0.00 0.0%
Gem Class C - - 1.95 7.0%
First Fidelity - - 0.48 1.7%
Current THCR holders
DJT 6.67 39.7% 6.67 23.9%
Public 10.14 60.3% 10.14 36.3%
New THCR to the Public - - 6.75 24.2%
----- ----- ----- -----
Total (1) 16.80 100.0% 27.94 100.0%
===== ===== ===== =====
(1) Excludes the warrant issued to DJT.
Scenario: Class A Share Purchase
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Sources and Uses Summary
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Sources Uses
Excess Cash $59.6 Payment to First Fidelity $50.0
New AC Mtg Notes 1,200.0 Payment to Bankers Trust 10.0
New Common 231.0 (1) Redeem Gem's Mtg Bonds 793.7
Redeem NatWest Loan 36.0
Redeem/Defease Plaza Mtg Bonds 378.6 (2)
Exercise Trump Plaza East Option 28.0
Purchase/Exchange A & C shares 81.0
Purchase B shares 0.4
THCR Equity to First Fidelity 10.0
Accrued Interest 37.9
Transaction Expenses 65.0
-------- --------
Total $1,490.6 $1,490.6
======== ========
(1) Assumes $140.0 million of new equity is sold to the public.
(2) Estimate based on current market conditions, subject to change.
- --------------------------------------------------------------------------------
Capitalization Summary
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As of March 31, 1996 Proforma Proforma % of
THCR Gem Adjust. As Adjust. Capital.
Excess Cash $8.5 $82.9 ($59.6) $31.8
Restricted Cash 5.5 25.0 30.5
------ ------ ------- --------
Total $14.0 $107.9 ($59.6) $62.3
====== ====== ======= ========
Debt
THCR 10.875% Mtg Bonds $330.0 ($330.0) $0.0 0.0%
THCR 15.500% Snr Sec Nts 155.0 155.0 9.6%
THCR Cap Lease & Other 45.2 45.2 2.8%
Gem 11.350% Mtg Bonds 793.7 (793.7) 0.0 0.0%
Gem NatWest Loan & Other 45.5 (44.9) 0.6 0.0%
New AC Mtg Notes 1,200.0 1,200.0 74.7%
Gem New Expand. Nts 0.0 0.0 0.0%
Gem New Other 0.0 0.0 0.0%
------ ------ ------- -------- -----
Total $530.2 $839.2 $31.4 $1,400.8 87.2%
====== ====== ======= ======== =====
Shareholders' Equity $47.0 $29.0 $130.2 $206.2 12.8%
------ ------ ------- -------- -----
Total Capitalization $577.2 $868.2 $161.6 $1,607.0 100.0%
====== ====== ======= ======== =====
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Assumptions
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Gem Expansion? No Transaction Fees and Expenses
AC New Mtg Notes 11.500% Expensed $21.7
Gem Credit Facility 11.500% Capitalized 43.3
Gem New Other Debt 10.000% Total $65.0
Redeem NatWest Debt Yes Amortization per year (10 years) $4.3
-13-
Rothschild Inc. Confidential
PROJECT WONDER
Proforma Income Statement
(dollar amounts in millions except per share data)
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Scenario: Class A Share Purchase / No Gem Expansion
Management Projections 1995 1996
-------------------------------------------- --------------------------------------------
(a) (a) Proforma (a) (a) Proforma
Gem THCR Adjust. As Adjust. Gem THCR Adjust. As Adjust.
------ ------ ------- ---------- ------ ------ ------- ----------
Net Revenues $557.7 $333.2 $890.9 $579.6 $620.4 $1,200.0
EBITDA $136.7 (b) $75.4 $7.7 (d) $219.9 $156.5 (b) $148.7 $8.0 (d) $313.2
Depreciation/Amortization $43.9 $24.8 $6.4 $75.1 $48.2 $26.4 $6.4 $81.0
CRDA amortization $3.1 3.1 $3.2 3.2
Write-off of Preopening Expenses 0.0 9.0 9.0
Amortization of Capitalized Costs 0.7 4.3 5.0 0.7 4.3 5.0
EBIT $89.7 $49.9 ($2.9) $136.7 $105.1 $112.6 ($2.6) $215.0
Interest Expense
THCR 10.875% Mtg Bonds - $35.9 ($35.9) $0.0 - $35.9 ($35.9) $0.0
THCR 15.500% Snr Sec Nts - 24.0 (c) 24.0 - 24.0 (c) 24.0
THCR Other - 5.8 (c) 5.8 - 9.0 (c) 9.0
Gem 11.350% Mtg Bonds 72.6 - (72.6) 0.0 - - 0.0 0.0
Gem NatWest Loan & Other 4.3 - (4.2) 0.1 - - 0.1 0.1
AC Mtg Notes - - 138.0 (c) 138.0 - - 138.0 (c) 138.0
Gem Credit Facility - - 0.0 0.0 - - 0.0 0.0
----- ----- ------ ------ ------ ----- ------- ------
Total $76.9 $65.7 $25.3 $167.9 - $68.9 $102.2 $171.0
Interest Income (3.7) (2.2) - (5.9) (1.1) (1.1) (2.3)
Partner Note - (0.2) - (0.2) - (0.3) (0.3)
Pretax Income $16.5 ($13.5) ($28.2) ($25.2) $106.2 $45.1 ($104.8) $46.5
Tax Provision 4.20% $6.9 ($5.7) ($11.8) (10.6) $44.6 $18.9 ($44.0) 19.5
----- ----- ------ ------ ------ ----- ------- ------
Net Income $9.6 ($7.8) ($16.4) ($14.6) $61.6 $26.2 ($60.8) $27.0
===== ===== ====== ====== ====== ===== ======= ======
Adjustment
Preopening Expenses (A-T) - - - 0.0 - 5.2 - 5.2
----- ----- ------ ------ ------ ----- ------- ------
Adjusted Net Income $9.6 ($7.8) ($16.4) ($14.6) $61.6 $31.4 ($60.8) $32.2
===== ===== ====== ====== ====== ===== ======= ======
EPS - ($0.46) - ($0.52) - $1.56 - $0.97
Adjust EPS - ($0.46) - ($0.52) - $1.87 - $1.15
Shares Outstanding - 16.8 11.1 27.9 - 16.8 11.1 27.9
Proforma Credit Statistics:
EBITDA / Cash Interest - - - 1.3 x - - - 1.8 x
EBITDA-Capex / Cash Interest - - - 1.0 - - - 1.5
Debt/EBITDA - - - 5.5 - - - 4.5
(a) Management estimate.
(b) Post Mgmt fees and Realty rent.
(c) Proforma for full year results.
(d) Represents the addback of Realty Rent, Gem Services Agreement Fee and Trump
Plaza East Lease, but excludes potential operating synergies.
-14-
Rothschild Inc.
Confidential
PROJECT WONDER
Proforma Income Statement
(dollar amounts in millions except per share data)
- --------------------------------------------------------------------------------
Scenario: Class A Share Purchase / No Gem Expansion
Management Projections 1997 1998
(a) (a) Proforma (a) (d) Proforma
Gem THCR Adjust. As Adjust. Gem THCR Adjust. As Adjust.
--- ---- ------- ---------- ---- ---- ------- ----------
Net Revenues $608.5 $724.5 $1,333.0 $642.0 $760.7 $0.0 $1,402.7
EBITDA $171.6 (b) $179.8 $8.3 (c) $359.7 $190.8 (b) $194.2 $8.6 (c) $393.5
Depreciation/Amortization $35.3 $27.4 $6.4 $69.1 $33.5 $29.6 $6.4 $69.5
CRDA amortization $3.4 3.4 $3.6 3.6
Write-off of Preopening Expenses 0.0 0.0 0.0 0.0
Amortization of Capitalized Costs 0.7 4.3 5.0 0.7 4.3 5.0
EBIT $132.9 $151.7 ($2.4) $282.2 $153.7 $163.9 ($2.1) $315.4
Interest Expense
THCR 10.875% Mtg Bonds - $35.9 ($35.9) $0.0 - $35.9 ($35.9) $0.0
THCR 15.500% Snr Sec Nts - 24.0 24.0 - 24.0 24.0
THCR Other - 8.0 8.0 - 3.9 3.9
Gem 11.350% Mtg Bonds - - 0.0 0.0 - - 0.0 0.0
Gem NatWest Loan & Other - - 0.1 0.1 - - 0.1 0.1
AC Mtg Notes - - 138.0 138.0 - - 138.0 138.0
Gem Credit Facility - - 0.0 0.0 - - 0.0 0.0
Total - $67.9 $102.2 $170.1 - $63.8 $102.2 $166.0
------ ----- ------ ------ ------ ------ ------ ------
Interest Income (2.9) - (2.9) (4.6) - (4.6)
Partner Note - (0.3) (0.3) - (0.3) (0.3)
Pretax Income $135.8 $84.0 ($104.6) $115.2 $158.2 $100.4 ($104.3) $154.3
Tax Provision 42.0% $57.0 $35.3 ($43.9) 48.4 $66.5 $42.2 ($43.8) 64.8
------ ----- ------ ------ ------ ------ ------ ------
Net Income $78.8 $48.7 ($60.7) $66.8 $91.8 $58.2 ($60.5) $89.5
====== ===== ====== ====== ====== ====== ====== ======
Adjustment
Preopening Expenses (A-T) - 0.0 - 0.0 - 0.0 - 0.0
------ ----- ------ ------ ------ ------ ------ ------
Adjusted Net Income $78.8 $48.7 ($60.7) $66.8 $91.8 $58.2 ($60.5) $89.5
====== ===== ====== ====== ====== ====== ====== ======
EPS - $2.90 - $2.39 - $3.47 - $3.20
Adjust EPS - $2.90 - $2.39 - $3.47 - $3.20
Shares Outstanding - 16.8 11.1 27.9 - 16.8 11.1 27.9
Proforma Credit Statistics:
EBITDA / Cash Interest - - - 2.1 x - - - 2.4 x
EBITDA-Capex / Cash Interest - - - 1.8 - - - 2.1
Debt/EBITDA - - - 3.9 - - - 3.6
(a) Management estimates.
(b) Post Mgmt fees and Realty rent.
(c) Represents the addback of Realty Rent, Gem Services Agreement Fee and Trump
Plaza East Lease, but excludes potential operating synergies.
(d) Estimate.
-15-
Rothschild Inc. Confidential
PROJECT WONDER
Estimated Proforma Balance Sheets
(dollar amounts in millions except per share data)
- --------------------------------------------------------------------------------
As of March 31, 1996
----------------------------------------------
THCR GEM Adjustments Proforma
------ ------ ----------- --------
CURRENT ASSETS:
Excess Cash $8.5 $82.9 ($59.6) $31.8
Cage Cash 5.5 25.0 0.0 30.5
Other Current Assets 36.0 27.3 0.0 63.2
------ ------ ----------- --------
Total Current Assets $50.0 $135.2 ($59.6) $125.6
PROPERTY & EQUIPMENT, NET 533.2 688.4 247.0 1,468.7
OTHER 28.4 14.1 43.3 85.9
------ ------ ----------- --------
TOTAL ASSETS $611.7 $837.7 $230.8 $1,680.1
====== ====== =========== ========
CURRENT LIABILITIES
Credit Facility $0.0 $0.0 $0.0 $0.0
Payables and Accruals 27.7 69.7 (37.9) 59.4
------ ------ ----------- --------
Total Current Liabilties $27.7 $69.7 ($37.9) $59.4
LONG TERM LIABILITIES
DJT 10.875% Mtg Bonds $330.0 ($330.0) $0.0
DJT 15.500% Snr Sec Notes 155.0 155.0
DJT Cap Lease & Other 50.3 50.3
Gem 11.350% Mtg Bonds 659.3 (659.3) 0.0
Gem Natwest Loan 45.5 (44.9) 0.6
AC New Mtg Notes 0.0 1,200.0 1,200.0
Gem Other 34.3 (27.4) 6.9
------ ------ ----------- --------
Total $535.3 $739.0 $138.4 $1,412.8
MINORITY INTEREST 1.7 1.7
CAPITAL 47.0 29.0 130.2 206.2
Total Liabilties and Capital $611.7 $837.7 $230.8 $1,680.1
====== ====== =========== ========
-16-
Rothschild Inc.
Confidential
PROJECT WONDER
Merger Transaction Summary
(dollar amounts in millions except per share data)
- --------------------------------------------------------------------------------
Purchase Price Summary
----------------------
Common shares %
------ ------ -
Gem Class A 1.35 38.8%
Class B 0.78 22.4%
Class C 1.35 38.8%
---- -----
Total 3.48 100.0%
==== =====
Equity Offering Price
---------------------
Class A Class B Class C Fst Fidelity
------- ------- ------- ------------
Cash $0.00 $0.50 $0.00
Debt 0.00 0.00 0.00
Common 30.00 0.00 30.00
------ ----- ------
$30.00 $0.50 $30.00
====== ===== ======
Allocation of Consideration
Cash 0.0% 100.0% 0.0%
Debt 0.0% 0.0% 0.0%
Common 100.0% 0.0% 100.0%
Amount of Consideration
-----------------------
Cash $0.0 $0.4 $0.0 -
Debt 0.0 0.0 0.0 -
Common 40.5 0.0 40.5 10.0
----- ---- ----- -----
Total $40.5 $0.4 $40.5 $10.0
===== ==== ===== =====
THCR exchange ratio 1.45 0.00 1.45 -
Assumed THCR price per share $20.750
THCR Shareholder Profile
Pre-Transaction Post-Transaction
--------------- ----------------
shares % shares %
------ - ------ -
Gem Class A - - 1.95 7.0%
Gem Class B - - 0.00 0.0%
Gem Class C - - 1.95 7.0%
First Fidelity - - 0.48 1.7%
Current THCR holders
DJT 6.67 39.7% 6.67 23.9%
Public 10.14 60.3% 10.14 36.3%
New THCR to the Public - - 6.75 24.2%
------- ----- ----- -----
Total (1) 16.80 100.0% 27.94 100.0%
======= ===== ===== =====
(1) Excludes the warrant issued to DJT.
Scenario: Class A Share Purchase
Sources and Uses Summary
Sources Uses
------- ----
Excess Cash $59.6 Payment to First Fidelity $50.0
New AC Mtg Notes 1,200.0 Payment to Bankers Trust 10.0
New Common 231.0 (1) Redeem Gem's Mtg Bonds 793.7
Redeem NatWest Loan 36.0
Redeem/Defease Plaza Mtg Bonds 378.6 (2)
Exercise Trump Plaza East Option 28.0
Purchase/Exchange A & C shares 81.0
Purchase B shares 0.4
THCR Equity to First Fidelity 10.0
Accrued Interest 37.9
Transaction Expenses 65.0
-------- --------
Total $1,490.6 $1,490.6
======== ========
(1) Assumes $140.0 million of new equity is sold to the public.
(2) Estimate based on current market conditions, subject to change.
Capitalization Summary
As of March 31, 1996 Proforma Proforma % of
THCR Gem Adjust. As Adjust. Capital.
Excess Cash $8.5 $82.9 ($59.6) $31.8
Restricted Cash 5.5 25.0 30.5
------ ------ ------- --------
Total $14.0 $107.9 ($59.6) $62.3
====== ====== ======= ========
Debt
THCR 10.875% Mtg Bonds $330.0 ($330.0) $0.0 0.0%
THCR 15.500% Snr Sec Nts 155.0 155.0 9.6%
THCR Cap Lease & Other 45.2 45.2 2.8%
Gem 11.350% Mtg Bonds 793.7 (793.7) 0.0 0.0%
Gem NatWest Loan & Other 45.5 (44.9) 0.6 0.0%
New AC Mtg Notes 1,200.0 1,200.0 74.7%
Gem New Expand. Nts 0.0 0.0 0.0%
Gem New Other 0.0 0.0 0.0%
------ ------ ------ -------- -----
Total $530.2 $839.2 $31.4 $1,400.8 87.2%
====== ====== ====== ======== =====
Shareholders' Equity $47.0 $29.0 $130.2 $206.2 12.8%
------ ------ ------ -------- -----
Total Capitalization $577.2 $868.2 $161.6 $1,607.0 100.0%
====== ====== ====== ======== =====
Assumptions
Gem Expansion? Yes Transaction Fees and Expenses
AC New Mtg Notes 11.500% Expensed $21.7
Gem Credit Facility 11.500% Capitalized 43.3
-----
Gem New Other Debt 10.000% Total $65.0
=====
Redeem NatWest Debt Yes Amortization per year (10 years) $4.3
-17-
Rothschild Inc. Confidential
PROJECT WONDER
Proforma Income Statement
(dollar amounts in millions except per share data)
- --------------------------------------------------------------------------------
Scenario: Class A Share Purchase / Gem Expansion
Management Projections 1995
------------------------------------------------
(a) (a) Proforma
Gem THCR Adjust. As Adjust.
------ ------ ------- ----------
Net Revenues $557.7 $333.2 $890.9
EBITDA $136.7 (b) $75.4 $7.7 (d) $219.9
Depreciation/Amortization $43.9 $24.8 $6.4 $75.1
CRDA amortization $3.1 3.1
Write-off of Preopening Expenses 0.0
Amortization of Capitalized Costs 0.7 4.3 5.0
EBIT $89.7 $49.9 ($2.9) $136.7
Interest Expense
THCR 10.875% Mtg Bonds - $35.9 ($35.9) $0.0
THCR 15.500% Snr Sec Nts - 24.0 (c) 24.0
THCR Other - 5.8 (c) 5.8
Gem 11.350% Mtg Bonds 72.6 - (72.6) 0.0
Gem NatWest Loan & Other 4.3 - (4.2) 0.1
AC Mtg Notes - - 138.0 (c) 138.0
Gem Credit Facility - - 0.0 0.0
------ ------ ------ -------
Total $76.9 $65.7 $25.3 $167.9
Interest Income (3.7) (2.2) - (5.9)
Partner Note - (0.2) - (0.2)
Pretax Income $16.5 ($13.5) ($28.2) ($25.2)
Tax Provision 42.0% $6.9 ($5.7) ($11.8) (10.6)
------ ------ ------ -------
Net Income $9.6 ($7.8) ($16.4) ($14.6)
====== ====== ====== =======
Adjustment
Preopening Expenses (A-T) - - - 0.0
------ ------ ------ -------
Adjusted Net Income $9.6 ($7.8) ($16.4) ($14.6)
====== ====== ====== =======
EPS - ($0.46) - ($0.52)
Adjust EPS - ($0.46) - ($0.52)
Shares Outstanding - 16.8 11.1 27.9
Proforma Credit Statistics:
EBITDA / Cash Interest - - - 1.3 x
EBITDA-Capex / Cash Interest - - - 1.0
Debt/EBITDA - - - 5.5
Management Projections 1996
------------------------------------------------
(a) (a) Proforma
Gem THCR Adjust. As Adjust.
------ ------ ------- ----------
Net Revenues $579.6 $620.4 $1,200.0
EBITDA $156.5 (b) $148.7 $8.0 (d) $313.2
Depreciation/Amortization $48.4 $26.4 $6.4 $81.2
CRDA amortization $3.2 3.2
Write-off of Preopening Expenses 9.0 9.0
Amortization of Capitalized Costs 0.7 4.3 5.0
EBIT $104.9 $112.6 ($2.6) $214.8
Interest Expense
THCR 10.875% Mtg Bonds - $35.9 ($35.9) $0.0
THCR 15.500% Snr Sec Nts - 24.0 (c) 24.0
THCR Other - 9.0 (c) 9.0
Gem 11.350% Mtg Bonds - - 0.0 0.0
Gem NatWest Loan & Other - - 0.1 0.1
AC Mtg Notes - - 138.0 (c) 138.0
Gem Credit Facility - - 1.7 1.7
------ ------ ------ -------
Total - $68.9 $103.9 $172.8
Interest Income (0.5) (1.1) (1.6)
Partner Note - (0.3) (0.3)
Pretax Income $105.3 $45.1 ($106.6) $43.9
Tax Provision 42.0% $44.2 $18.9 ($44.8) 18.4
------ ------ ------ -------
Net Income $61.1 $26.2 ($61.8) $25.4
====== ====== ====== =======
Adjustment
Preopening Expenses (A-T) - 5.2 - 5.2
------ ------ ------ -------
Adjusted Net Income $61.1 $31.4 ($61.8) $30.7
====== ====== ====== =======
EPS - $1.56 - $0.91
Adjust EPS - $1.87 - $1.10
Shares Outstanding - 16.8 11.1 27.9
Proforma Credit Statistics:
EBITDA / Cash Interest - - - 1.8 x
EBITDA-Capex / Cash Interest - - - 1.1
Debt/EBITDA - - - 5.0
- --------------------------------------
(a) Management estimate.
(b) Post Mgmt fees and Realty rent.
(c) Proforma for full year results.
(d) Represents the addback of Realty Rent, Gem Services Agreement Fee and Trump
Plaza East Lease, but excludes potential operating synergies.
-18-
Rothschild Inc.
Confidential
PROJECT WONDER
Proforma Income Statement
(dollar amounts in millions except per share data)
- --------------------------------------------------------------------------------
Scenario: Class A Share Purchase / Gem Expansion
Management Projections 1997 1998
(a) (a) Proforma (a) (d) Proforma
Gem THCR Adjust. As Adjust. Gem THCR Adjust. As Adjust.
------ ------ ------- ---------- ------ ------ ------- ----------
Net Revenues $678.8 $724.5 $1,403.2 $773.6 $760.7 $0.0 $1,534.3
EBITDA $204.9 (b) $179.8 $8.5 (c) $393.3 $251.0 (b) $194.2 $9.1 (c) $454.3
Depreciation/Amortization $41.9 $27.4 $6.4 $75.7 $45.4 $29.6 $6.4 $81.4
CRDA amortization $3.8 3.8 $4.3 4.3
Write-off of Preopening Expenses 0.0 0.0 0.0 0.0
Amortization of Capitalized Costs 0.7 4.3 5.0 0.7 4.3 5.0
EBIT $159.2 $151.7 ($2.1) $308.7 $201.3 $163.9 ($1.6) $363.6
Interest Expense
THCR 10.875% Mtg Bonds - $35.9 ($35.9) $0.0 - $35.9 ($35.9) $0.0
THCR 15.500% Snr Sec Nts - 24.0 24.0 - 24.0 24.0
THCR Other - 8.0 8.0 - 3.9 3.9
Gem 11.350% Mtg Bonds - - 0.0 0.0 - - 0.0 0.0
Gem NatWest Loan & Other - - 0.1 0.1 - - 0.1 0.1
AC Mtg Notes - - 138.0 138.0 - - 138.0 138.0
Gem Credit Facility - - 6.4 6.4 - - 7.2 7.2
------ ----- ------ ------ ------ ------ ------- ------
Total - $67.9 $108.6 $176.5 - $63.8 $109.4 $173.2
Interest Income 0.0 - 0.0 0.0 - 0.0
Partner Note - (0.3) (0.3) - (0.3) (0.3)
Pretax Income $159.2 $84.0 $110.7) $132.5 $201.3 $100.4 ($111.0) $190.7
Tax Provision 42.0% $66.9 $35.3 ($46.5) 55.7 $84.5 $42.2 ($46.6) 80.1
------ ----- ------ ------ ------ ------ ------- ------
Net Income $92.3 $48.7 ($64.2) $76.9 $116.7 $58.2 ($64.4) $110.6
====== ===== ====== ====== ====== ====== ======= ======
Adjustment
Preopening Expenses (A-T) - 0.0 - 0.0 - 0.0 - 0.0
------ ----- ------ ------ ------ ------ ------- ------
Adjusted Net Income $92.3 $48.7 ($64.2) $76.9 $116.7 $58.2 ($64.4) $110.6
====== ===== ====== ====== ====== ====== ======= ======
EPS - $2.90 - $2.75 - $3.47 - $3.96
Adjust EPS - $2.90 - $2.75 - $3.47 - $3.96
Shares Outstanding - 16.8 11.1 27.9 - 16.8 11.1 27.9
Proforma Credit Statistics:
EBITDA / Cash Interest - - - 2.1 x - - - 2.6 x
EBITDA-Capex / Cash Interest - - - 1.4 - - - 2.1
Debt/EBITDA - - - 4.0 - - - 3.4
(a) Management estimates.
(b) Post Mgmt fees and Realty rent.
(c) Represents the addback of Realty Rent, Gem Services Agreement Fee and Trump
Plaza East Lease, but excludes potential operating synergies.
(d) Estimate.
-19-