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Arnold M. Knightly

Riv Acquisition may raise its bid for Riviera parent

15 May 2007

LAS VEGAS, Nevada -- An investment group in a public war of words with the Riviera Holdings Corp.'s board of directors suggested Monday that it may counter a $30 per share buyout offer made for the gaming company late last week.

In a letter to Riviera Holdings' board, Riv Acquisition said it's considering its options and may offer a bid to surpass Friday's bid by an investment group led by Cosmopolitan developer Bruce Eichner.

Also in the letter, Riv Acquisition withdrew a slate of nominees for Riviera Holdings' board. The group suggested Riviera Holdings' decision to hire the financial advisory firm Jefferies & Co. to help the board with the possible sale of the company prompted the withdrawal.

Riv Acquisition declined to comment beyond Monday's letter.

Riviera Holdings on Monday issued a statement that said two independent studies recommended re-election of the company's current board. Riviera Holdings issued a statement Monday acknowledging the "dissident group" had withdrawn its board nominees. Riviera Holdings Chairman William Westerman could not be reached for comment.

Riviera Holdings shareholders will vote on board membership today at its annual shareholders meeting at the Riviera.

The shareholders meeting was expected to be a contentious affair after Riv Acquisition's $27 per share offer was blocked by the gaming company's board.

Westerman accused the investment group of colluding with two major company shareholders for control of additional shares. Riv Acquisition controls 20 percent of Riviera Holdings stock and the agreement would have given the group an additional 9.2 percent.

Approval of 60 percent of the shareholders would be needed to approve a buyout of Riveria Holdings.

The investment group has filed a lawsuit in District Court over the board's rejection of its buyout offer. Monday's letter did not address the lawsuit's status.

The Eichner group's new bid is 11 percent higher than Riv Acquisition's March 26 bid. Eichner, a New York-based developer, was involved in a previous $21 per share bid in November. But a 30-day exclusive negotiating period with the board expired before a deal could be reached.