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LAS VEGAS -- Riviera Holdings Corp. said Wednesday it will conduct a shareholder vote next week on a $426.5 million buyout offer from a privately held investment group after the company's board of directors said it did not have enough information to determine if an 11th-hour competing offer was credible.
The vote, in which Riviera stockholders will either accept or reject a $17 per share offer from Riv Acquisition Holdings, had been scheduled for Aug. 8. That same day, International Gaming & Entertainment proposed to pay $20 a share for the company, which operates the Riviera and a Colorado casino, causing the vote to be postponed.
"In a statement, Riviera Holdings said its board of directors had not received sufficient information from International Gaming & Entertainment on the takeover proposal to compare the offer to one from Riv Acquisition, a well-financed investment group that includes Starwood Capital Group founder Barry Sternlicht, Las Vegas developer Brett Torino and Chicago developer Neil Bluhm.
""The information requests pertained to, among other things, (International Gaming & Entertainment's) equity investors, assurance of obtaining financing, and plans for obtaining the necessary approvals to consummate the acquisition," Riviera Holdings said in a statement.
"Riv Acquisition President Scott Butera said he wasn't surprised that the company rescheduled the vote.
""It was a bizarre offer. There wasn't a lot of substance behind it," Butera said. "We're ready to go forward with the vote. We're still firm in our position that we are the only credible bidder out there for Riviera. We have proof of our financing and we believe we have offered a full price for the company."
"The shareholder vote was rescheduled for 1 p.m. Tuesday.
"Approval of the buyout by Riv Acquisition is not a foregone conclusion, however. Several of the company's largest shareholders have said they will vote against the buyout, saying the $17 per share price is too low.
"Some investors thought the 26 acres of Strip property that houses the Riviera is worth twice the purchase price, which values the land at $10 million an acre.
"Asset management firm D.E. Shaw, which controls 1.2 million shares; and Triple Five Investco, a subsidiary of Canadian mall developer Triple Five Group, which owns 1 million shares; have said they would vote against the deal.
"Riv Acquisition already holds more than 2.1 million shares of Riviera stock, having purchased the holdings of company Chairman Bill Westerman for $15 a share.
"Riviera Holdings needs approval from 60 percent of its outstanding shareholders for the deal to be approved. If a shareholder doesn't participate, that will have the same effect as if he voted against the buyout.
"Westerman has actively lobbied shareholders to support the transaction, even during the company's quarterly conference.
"In Wednesday's statement, Riviera said it remained open to discussions with International Gaming & Entertainment. However, if shareholders reject the buyout offer from Riv Acquisition doesn't mean the company would enter an acquisition agreement with the second bidder.
"Riviera Holdings made the announcement after trading closed Wednesday on the American Stock Exchange. Shares in the company fell 28 cents, or 1.38 percent, to close at $20.
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