RIV investors looking
for more than
$17 per share

Apr 11, 2006 5:44 AM

A group of investors agreed last week to pay $211.5 million for Riviera Holdings Corp. (RIV), or about $17 for each outstanding share, but neither Wall Street investors nor the company’s largest shareholder feels the price is high enough.

In trading on Monday, shares in the company traded as high as $19.85, certainly a premium over the price offered by Riv Acquisition Holdings Inc., the buying company that represents Flag Luxury Riv LLC, Rivacq LLC and High Desert Gaming LLC.

Also on Monday, it was revealed by Riviera Holdings that the D.E. Shaw Group, which holds about 1.2 million shares, said in a letter to Riviera Holdings Chairman and CEO Bill Westerman that the offer substantially undervalues the company’s assets — especially its land on the Las Vegas Strip."

The D.E. Shaw letter, which indicated the group will oppose the proposed sale, said the $17 per share offer values the 26 acres of land Riviera owns in Las Vegas at $10.3 million per acre, which is less than the value implied in other deals.

As an example, the group pointed to the offer made by Ameristar Casinos Inc. (ASCA) in its bid for Aztar Corp. (AZR), saying that deal valued the 34 acres of the Tropicana Hotel/Casino on the south end of the Strip at roughly $19.6 million per acre.

Riv Acquisition Holdings entered negotiations for the aging Las Vegas property last year by buying approximately one million shares from Westerman for a price of $15 per share and taking an option on Westerman’s remaining 925,000 shares at a price to be determined.

Shortly afterward, Westerman announced that negotiations had been terminated and that the group had not offered $17 a share.

All that fell by the wayside two weeks ago when Westerman announced that negotiations for the sale of the company had resumed.

Autotote expands

Autotote Enterprises, Inc., a subsidiary of Scientific Games Corporation (SGMS) has expanded its Connecticut operations by acquiring the assets of The Shoreline Star Greyhound Park & Simulcast Facility in Bridgeport.

Purchase price for the property was given as $12 million. The company said the acquisition would be accretive to earnings.

Lorne Weil, chairman and CEO, said "this acquisition will be an integral part of our Connecticut Off-track Betting redevelopment plan."

An era ends

A 34-year history of racing at Penn National Race Course, owned and operated by Penn National Gaming Inc. (PENN), has come to an end. The company announced that the property will be demolished to make way for a new facility that will accommodate both live horse racing and a home for slot machines.

Another horse track, Gulfstream Park, which is owned by Magna Entertainment Corp. (MECA) suffered a similar fate. It was completely destroyed and a new facility built, emphasizing slots more than the traditional racetrack.

Penn National plans to build a five-story, 365,000 square foot racino to replace the existing racetrack. Meanwhile, live racing will resume on April 26 with the new Paddock Club providing facilities for its live race fans and the simulcast customers.

A spokesman said the Paddock Club can accommodate about 900 people.

Dispute resolved

Lakes Entertainment Inc. (LACO) announced it has received $2.6 million in a dispute settlement with the Kickapoo Traditional Tribe of Texas.

The dispute developed when the tribe terminated a development agreement with Lakes Entertainment last November.

In addition to the settlement amount, the tribe agreed to pay Lakes Entertainment an additional $600,000 for a parcel of real estate that borders the Kickapoo Lucky Eagle Casino in Eagle Pass, Texas.

Shortchanged

While Louisiana Gov. Kathleen Blanco has been complaining about the lack of funds coming from the federal government to help repair the Katrina damage, the city of New Orleans has been lamenting Blanco’s failure to compensate the city for public services provided for Harrah’s Casino.

The original deal called for reimbursement to the city for expenditures made for the casino owned by Harrah’s Entertainment Inc. (HET). But even when Mike Foster was governor, the city has had to fight for the funds because the state annually complained that it did not have the money to meet its commitment.

But, after Katrina, the situation has become more critical.

"It’s not fair and it’s unacceptable," said state Rep. Karen Carter.

"The money is desperately needed for us to rebuild New Orleans," she asserted.

Harrah’s Casino received city services such as police and fire protection but the arrangement requires the city to seek reimbursement from the state.

THE INSIDER: Bally Technologies Inc. (BYI), formerly Alliance Gaming Inc., says it has received regulatory approval for its Hot Shot Progressive system from Nevada, Mississippi, Ontario, Canada, Michigan and Gaming Laboratories International.

Earnings calls have been issued by Harrah’s Entertainment Inc. (HET) for Thursday, April 27, at 6 a.m. PDT; MGM MIRAGE Inc. (MGG) also on April 27, at 8 a.m.PDT, and Station Casinos Inc. (STN) for Thursday, May 4, at 9 a.m. PDT.

Analysts at Morgan Stanley have downgraded the shares of Station Casinos Inc. (STN) from overweight to equalweight.

Nevada Gold & Casinos Inc. (UWN) has obtained a bridge loan of $20 million for the development of Tioga Downs Racetrack in Nichols, N.Y. The track is owned by American Racing and Entertainment LLC, a group in which Nevada Gold has a 40% interest.

Wesley D. Allison is resigning his position as acting chief accounting officer of Las Vegas Sands Corp. (LVS).

Longtime gaming executive William H. Robinson has joined MTR Gaming Group Inc. (MNTG) as COO of the company’s Nevada operations.

At Multimedia Games, Inc. (MGAM), the company announced on Monday that Michael J. Maples, Sr., a member of the board of directors, had been appointed company chairman.

A card club bill, being pushed in Alaska by legendary poker player Perry Green, has died in committee while lacking support among the Senate members.

Massachusetts Gov. Mitt Romney has signed a bill that extends the simulcast law through the calendar year after the House passed the bill 141-13. Simulcast wagering had ended at Suffolk Downs and three other tracks when the previous law expired on March 31.

Richard Hart, former general manager of Lakes Region Greyhound Park in New Hampshire, has pleaded guilty to violating gambling laws. He was part of a group of 16 people charged with money laundering and other gambling wrongdoing.