Las Vegas Sun

October 22, 2018

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Board rejects offer to sell Riviera Holdings

The board of directors of Riviera Holdings Corp. has rejected a bid from a shareholder to buy the company that owns the 2,100-room Strip property.

In a statement issued this morning, company officials said a bid by D.E. Shaw Laminar Portfolios LLC, New York, did not say how it would address regulatory issues in Missouri, where the Riviera is a bidder to build a hotel-casino in Jefferson County.

"Taking into account all relevant factors, including these regulatory matters and Riviera's objective of achieving regional diversification as one of the means of maximizing shareholder value, the board concluded that the potential transaction was not in the best interests of Riviera and its shareholders at the present time," the statement said.

The company's board of directors met over the weekend. A company executive, citing SEC regulations, said he could not elaborate further on the board's analysis of the offer.

Duane Krohn, treasurer and chief financial officer of Riviera Holdings, said the board would re-evaluate any revised bid Laminar presents. Laminar officials could not be reached for comment today on whether they would modify their offer.

Laminar said in a Securities and Exchange Commission filing Friday that it would pay $12 a share for the company, which also operates a high-profile casino in Black Hawk, Colo.

The stock, traded on the American Stock Exchange, closed Friday afternoon at $12.10 a share, up 20 cents from its Thursday close.

After rising to a price of $12.44 early today, the stock retreated to $12.15 a share at midday.

Laminar already owns 9.7 percent of the company shares, the second-largest holding by any one shareholder behind Riviera Chief Executive William Westerman, who owns about 18 percent.

Laminar acquired 350,000 of the 3.5 million outstanding shares in April. The New York investment company was in the spotlight in December when it emerged as the buyer of FAO Inc., the parent company of the F.A.O. Schwarz toy store in Manhattan and its sister store in the Forum Shops at Caesars, for $20 million.

The company is the third to come forward publicly with a bid to acquire Riviera Holdings in recent months.

Donald Trump was a Riviera shareholder and increased his stake in the company to 10 percent last year, but he later said his interest was only in getting a gaming license in Nevada. Ultimately, he sold his shares and nurtured a partnership with New Frontier owner Phil Ruffin, announcing in July plans to build a high-rise hotel and condominium project on New Frontier hotel-casino land near the Fashion Show mall.

Italian investor Fabrizio Boccardi, who was backed by a French casino operator, also made a play for the Riviera last year with an unsolicited bid. In its SEC filing, Laminar said it had broken off strategic talks with Boccardi relating to the Riviera.

But Westerman said in a recent interview with In Business Las Vegas, a sister publication to the Sun, that about a dozen potential buyers have "kicked the tires" at the Riviera. He said that he and the company's board of directors have been content to evaluate offers that come in, but that they are in no hurry to sell the resort, which will be 50 years old next year.

The Riviera Las Vegas capitalizes on the convention industry with its proximity to the Las Vegas Convention Center and Sands Expo Center and by hosting small groups at its 160,000-square-foot meeting center. The hotel-casino played host to 298 conventions in 2003 and currently has more than 622,000 convention-related advanced bookings through 2007, according to an SEC filing.

The Riviera Las Vegas, which has five towers with about 2,100 rooms, including 169 suites, has reported an occupancy rate ranging from 95.2 percent to 98.2 percent between 1994 and 2000. Even during the post-9/11 downturn, the Riviera had a 91.5 percent occupancy rate in 2001 and an 89.6 percent rate in 2002. Last year, occupancy was at 92.2 percent, compared with the city's average of 86 percent reported by the Las Vegas Convention and Visitors Authority.

The Riviera Black Hawk, which opened in February 2000, is one of the first casinos encountered by travelers arriving on the main highway to Black Hawk from Denver, 45 miles away.

With 974 slot machines and nine blackjack tables, the casino is considered the fourth largest in the low-stakes market by number of gaming devices. In Colorado, each slot machine and each table game is considered one gaming device.