LAS VEGAS-Referring to the company he leads as a henhouse, Riviera Holdings chairman William Westerman this week told shareholders of the public casino operator to retain the current board of directors in an upcoming vote and not let in “the fox,” his term for Riv Acquisition Holdings, a group of dissident shareholders that is pushing for a new board after being rebuffed in its attempt to acquire the company outright. Riv‘s point man, Paul Kanavos, responded with his own letter, countering all the “inaccurate” claims made by Westerman. The vote is scheduled for May 15.
Riviera owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, CO. Riv Acquisitions consists of Paul C. Kanavos and Robert Sillerman, the managing members of New York City-based Flag Luxury Properties LLC; Las Vegas developer Brett Torino; and Starwood Capital Group chairman and CEO Barry Sternlicht. The group controls about 20% of Riviera‘s outstanding shares, about half of which Westerman sold to the group for $15 per share.
Last year, Riviera’s shareholders rejected a $17-per-share cash offer for the company from Riv. In late-March of this year, Riviera rejecteda $27-per-share offer from the same group without a shareholder vote, saying Riv’s entry into a lock-up agreement with another significant holder of Riviera’s stock violated a previous agreement, thereby allowing Riviera to summarily dismiss the offer.
In April, Riv filed suit in Clark County District Court challenging the decision. Later in the month, it gave Riviera shareholders the option of electing an entirely new slate of board members for the company, prompting this latest war of words.
Kanavos says the existing board’s decision not to allow shareholders to vote on its latest offer demonstrates that the board is not prepared to fully and objectively consider whether the offer maximizes shareholder value and, therefore, needs to be replaced. Westerman claims Riviera’s board is objective and that Riv’s goal is to install a board that would approve a below-market offer. Kanavos counters that its nominees are well known in the hotel and gaming industries and have no vested interests in the ultimate outcome of Riviera’s ownership situation.
Riv’s nominees for the board are: Thalia Dodero, former three-term chair of the Clark County Commission; Larry duBoef, consultant to both the Taj Mahal Casino in Atlantic City and to Aztar Corp.; W. Dan Reichartz, principal of DR&DR LP, a strategic planning firm; Michael Rumbolz, chairman & CEO of Cash Systems Inc., which services the casino industry; and Daniel Yih, COO of GTCE Golder Rauner LLC, a private equity firm.
Each concluded their letter by telling shareholders to return their proxy card, not the others’. Riv’s proxy card is blue, Riviera’s is white. “Please do not return any card sent to you by Riv Acquisition Group,” states Westerman’s letter, in all capital letters. “Do not let the fox into the henhouse!” Counters Kanavos: “…We believe it would be in the best interests of all shareholders to elect a new objective and independent Board. Do not sign any white proxy card you may receive from the (Riviera).”