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Best of Liz Benston

Gaming Guru

Liz Benston

Triple Five Increases Stake in Riviera Holdings

9 June 2005

LAS VEGAS -- Mall developer Triple Five Group has purchased a significant stake in the company that owns the Riviera hotel and casino in Las Vegas and said it may buy more shares, which could give Triple Five a say in the aging property's future.

Various Triple Five entities have accumulated about 1.2 million shares of Riviera Holdings Corp., a stake of about 9.6 percent, according to a Wednesday regulatory filing.

Buying more than a 10 percent stake in a casino company would trigger an investigation by state gaming regulators.

Triple Five, which has offices in Canada and Las Vegas, said it is considering buying more shares and intends to meet with Riviera management "to explore strategic alternatives."

The company didn't specify what those plans might be other than to say that they could include "a restructuring to separate the casino from the real estate operations."

Triple Five officials could not be reached for further comment.

The company has announced plans to build a giant mall in northwest Las Vegas on par with the company's Mall of America near Minneapolis and the world's largest mall, a Triple Five property in Alberta. The company has developed several retail centers in Las Vegas including Boca Park at Rampart and Charleston boulevards.

Triple Five hasn't been licensed as a gaming operator, though it planned to develop a mall and casino complex with Boyd Gaming Corp. in the southwest neighborhood of Spring Valley. That project ended up being rejected in 2000 by a state advisory board.

Riviera executives are in the dark about Triple Five's plans because they haven't yet met with the mall developer, Riviera Chief Financial Officer Duane Krohn said.

Triple Five is just the latest in a string of investors to buy a significant stake in Riviera Holdings. Riviera's stock, which split three-for-one in March, has risen significantly over speculation that individual shareholders might take over the company and redevelop the Strip property. The stock also has ballooned more recently as investors have speculated on soaring land prices on the Strip, triggered in part by deals to build high-rise condominiums.

Previous investors include gaming company Jacobs Entertainment Inc. and Donald Trump, who obtained a license from Nevada regulators last year after reaching the 10 percent threshhold and sold his stake months later. Trump said he acquired the 10 percent stake to obtain a Nevada gaming license.

Triple Five bought the shares at an average purchase price of $19.79 per share from New York-based hedge fund investor D.E. Shaw, which had in turn purchased Trump's shares.

Riviera's stock rose 50 cents Wednesday to $19 per share. Shares were trading at more than $41 before the stock split in March and resettled at $13.05 the following day.

"We've had (investors) come and go," Krohn said. "Some (of the investments) have done very well. And we've done well."