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The Strip: Investor Waits for Answer on Riviera Offer

22 April 2003

by Jeff Simpson

LAS VEGAS -- An Italian investor Monday said he has yet to get a response for his unsolicited offer to buy Riviera Holdings Corp. for $30 million.

A company executive, however, said the owner of the Strip resort Riviera declined investor Fabrizio Boccardi's offer to buy the company for $8.50 per share in cash and the assumption of $220 million in debt.

"I assume someone will ask the question," Riviera Chief Financial Officer Duane Krohn said about expectations that analysts would ask about the Italian investor's offer during a conference call today to discuss the company's earnings for the quarter ended March 31. "The offer's been reported so much. We'll say the same thing (we said when the offer was first reported)."

Krohn earlier said the company gets lots of offers.

"Every hotel and casino in town gets these kinds of offers, and all public companies have an obligation to look at them," Krohn said when Boccardi's offer was first reported about two weeks ago.

Boccardi's deal would provide existing bondholders with an additional $15 million in capital to be used to redevelop the Strip property. Boccardi would emphasize Las Vegas rather than prospective Riviera ventures in Missouri and New Mexico.

Riviera's best counteroffer, Boccardi said, was to ask him and his investors to pay $10 per share and to provide a $10 million nonrefundable escrow payment.

Boccardi said the nonrefundable nature of the request makes it a deal killer, saying that the cash would give bondholders an incentive to kill the proposed deal and let the company keep the money.

"I want them to be reasonable," Boccardi said. "They're trying to take advantage of my inexperience in the industry. I'm not (billionaire MGM Mirage majority owner) Kirk Kerkorian, but I'm not an idiot."

He's willing to offer a refundable escrow deposit, one that would be returned if he's unable to persuade bondholders not to exercise their veto over a buyout.

The dollar amounts in his offer are negotiable, he added.

Boccardi's Riviera offer isn't the first time he's announced an offer for a Strip property.

Starwood Hotels and Resorts Worldwide rejected a $200 million offer Boccardi made for the company's Desert Inn property before Steve Wynn bought it for $270 million in 2000.

Riviera shares closed Monday at $6.02, down 13 cents, or 2.11 percent, on the American Stock Exchange, but well above its $3.95 price before Boccardi's bid was first reported.

Asked if it was Boccardi's offer or a newfound appreciation for Riviera's value that caused the stock price rise, Krohn quipped: "It must be a new appreciation of our value."

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