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LAS VEGAS, Nevada -- A group of investors, including former Starwood Hotels' chairman Barry Sternlicht and Las Vegas real estate developer Brett Torino, have agreed to buy a portion of Riviera Holdings Corp., the parent company of the 50-year-old Riviera.
In a filing Wednesday with the Securities and Exchange Commission, the investors said they had entered into an agreement Dec. 22 to purchase 1 million shares of Riviera common stock from company Chairman Bill Westerman and a Westerman family trust for $15 a share. The transaction is expected to close between Jan. 3 and Jan. 10.
The buyers agreed to make a second stock purchase of 650,000 shares, also at $15 a share, or $9.75 million, at a later date.
According to the SEC filing, Westerman owns almost 2.1 million of Riviera's 12.4 million outstanding shares.
Three limited-liability companies would buy different percentages of Westerman's shares and the buyers would be allowed to place a representative from the group of investors on Riviera's board of directors.
In addition to the Strip hotel-casino, Riviera Holdings operates a casino in Black Hawk, Colo.
Once the second stock purchase is completed, the investor group said it plans to seek licensing approval by gaming authorities in Nevada and Colorado.
Riviera Holdings Chief Financial Officer Duane Krohn said Thursday he had been advised by the corporation's legal counsel not to make any statements concerning the transaction.
The deal comes almost two months after Riviera Holdings said it had completed a review of strategic alternatives for the company's flagship 2,070-room Riviera, but reached no conclusions. Company leaders had said they were looking at redeveloping the resort's 26-acre Strip location, and were also considering joint ventures, refinancing and mergers.
That November announcement sent Riviera shares tumbling more than 25 percent in one day of trading on the American Stock Exchange.
When word of the transaction filtered out Wednesday, shares in Riviera jumped $1.94, or a 13.4 percent, to $16.37. On Thursday, shares in the company closed at $16.22, down 15 cents, or 0.92 percent.
The lengthy filing, and a subsequent filing by Westerman, did not spell out any plans by the investors to take a larger stake in Riviera. The company has been the subject of investor speculation over the past two years because of the company's potentially lucrative location on the north end of the Strip.
Several individuals and companies have bought large shares of Riviera Holdings, eventually selling the stock without moving to control the entire gaming operation.
One Wall Street gaming analyst, who asked not to be named, speculated Thursday that Sternlicht's presence in the purchasing group could mean the buyers intend to take a larger stake in Riviera Holdings and eventually supplant the current management team.
The transaction would bring Sternlicht's re-entry into gaming. Sternlicht oversaw Starwood when it owned Caesars Palace the now-closed Desert Inn.
Sternlicht, who left Starwood earlier this year, has the title of founder and chairman emeritus of Starwood. He operates Starwood Capital, a private real estate investment and equity firm headquartered in Greenwich, Conn., that manages more than $5 billion, a statement by the hotel company last spring said.
During Riviera Holdings' November conference call with analysts and investors, Westerman said the Riviera would benefit from the construction of seven condominium and time share projects with 4,000 rooms within walking distance of the Strip casino.
The company had booked the value of the Riviera site at $21 million, well less than $1 million an acre. He thought the site could fetch well more than $1 million an acre in a sale based on recent Strip land acquisitions, including Harrah's Entertainment's purchase of the Imperial Palace for $20 million an acre.
One of the limited-liability companies involved in the Riviera stock purchase includes Torino and Paul Kanavos, the principals who built the $175 million Hawaiian Marketplace retail center on the south end of the Strip near Polo Towers.
Torino, who developed Canyon Gate Country Club and other commercial and residential properties in Southern Nevada, could not be reached for comment Thursday.
Kanavos is based in New York and is chairman of Flag Luxury Properties, which developed Florida Ritz-Carltons in South Beach and Jupiter.
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