Judge says Riviera can talk with buyout group

August 14, 2007 6:36 AM


It may end up as a case of the pursued becoming the pursuer.

The row between Riviera Holdings Corporation (RIV) and Riv Acquisition Holdings Inc. developed earlier this year when the RIV management determined that the acquisition group had violated a state statute and therefore was disqualified for a period of three years in negotiating a deal for the acquisition of the company that operates the Riviera Hotel/Casino on the north end of the Strip in Las Vegas.

Following the filing of a suit and a subsequent countersuit filing, a judge ruled on Aug. 10 that Riv Acquisition Holdings did not violate the Nevada Business Combination Law Statute and therefore RIV Is not prevented from negotiating with the acquisition group regarding the latter’s $34 per share buyout offer.

However, in the SEC filing, the company wrote that "The board of directors of the company has not at the present time determined to pursue any strategies or financial alternatives regarding the (acquisition) proposed merger, and there is no assurance that the board of directors will recommend any alternatives."

Since the offer was made, the share price of RIV has fallen to the upper $20 level, thus making a $34 offer more attractive.

Yet, with the recent market turmoil over credit or the lack thereof, investors have developed concerns whether recent buyout offers will be completed because of the difficulty in obtaining the necessary cash. More than 50 leveraged buyouts have been cancelled in recent days.

Whether the Riviera directors will find the $34 offer attractive and in the best interest of its shareholders remains to be seen, as is the Riv Acquisition Holdings’ interest in going forward with the offer.

New loan

According to a report from Reuters Loan Pricing Corp., Landry’s Restaurants (LNY), owner of the restaurant chain as well as the Golden Nugget Hotel/Casinos in Las Vegas and Laughlin, Nev., has arranged a new $590 million bank loan to meet its bond repayments.

The issue developed when Landry’s delayed its required financial filings with the SEC while auditors reviewed the company’s historical options granting policies.

Saying the filing delays had violated the covenants of the $400 million bond issue, the issuer demanded immediate payment. Actually, it was believed that the demand was made because of a credit-crunch developing in the market place.

Wachovia Securities reportedly is leading the effort in the new financing. Some 11 banks reportedly are participating in the loan.

Track sale

Penn National Gaming Inc. (PENN), the most aggressive racetrack acquirer during the past year, is adding another facility to its portfolio.

The company announced last week that it has agreed to acquire Rosecroft Raceway in Fort Washington, Md., a harness track that has been owned and operated for the past half-dozen years by the Cloverleaf Enterprises Inc.

No sale price was given.

Earlier this year, Penn National added Zia Park in New Mexico to its stable of racetracks. The track also has a slot machine operation.

Although Maryland currently does not permit slot machines at its racetracks, a strong movement is on with the support of the governor.

THE INSIDER: American Wagering Inc. (BETM) has named Melody Sullivan as the company’s new chief financial officer. She previously was CFO at Gaming Partners International Inc.

Melco PBL Entertainment Ltd. will announce its second quarter results on Friday, Aug. 17, at 5:30 a.m. PDT.

Camelot Consortium, a U.K. lottery operator that has an affiliation with Scientific Games Corporation (SGMS), has been chosen to received the country’s third lottery operating license. As such, Scientific Games expects to be the provider of instant tickets when the new licensee begins operating in early 2009.

The slots operation at The Meadows Racetrack in Pennsylvania, a property owned by Las Vegas veteran gaming executives Bill Paulos and Bill Wortman, had slots revenue of $403 million in the first 20 days.

Penn National Gaming Inc. (PENN), in the process of being bought out by private equity companies, has seen its shares upgraded from hold to buy by analysts at Morgan Joseph.

Mark Giannotonio, an Atlantic City native who has been employed at the Tropicana for the past two decades, has been named president and general manager of that facility. The property was acquired earlier this year by Tropicana Casinos & Resorts, a subsidiary of Columbia Sussex Inc.

Race fans are wondering what will happen to Preakness winner Curlin now that two attorneys, who own a combined 20% of the horse, have been ordered jailed while awaiting trial on conspiracy to commit fraud charges. These charges stem from their involvement in a drug class-action settlement.

The Mississippi Belle II Casino in Clinton, Iowa, will make its final voyage on Oct. 10, ending the riverboat gambling era in Iowa. All casinos are now land-based.

Shareholders of Hilton Hotels Corporation (HLT) will be asked to vote Tuesday, Sept. 18, on whether the company should go forward with the merger agreement announced last month.

Charles S. Crawford has been appointed executive vice president of operations for Cash Systems Inc. (CKNN).