iviera Holdings Corp.’s William Westerman said the bid submitted by Ian Bruce Eichner and Dune Capital Management LP on Friday was fair because it did not seek to lock up other large shareholders and remained open to an auction process.
Eichner is behind the us$ 2.4 billion Cosmopolitan casino resort being built further south on the Strip. "We consider it an extremely credible offer," Westerman told The Associated Press."We believe they are very eligible buyers in terms of financial capability and licensing capability. They’ve proven that they can do the job."
Eichner said his relationship with the company and the promise of financing from Deutsche Bank led to confidence in his bid. "Deutsche Bank just provided us$ 3 billion in financing to me on a project that’s far larger," said Eichner, a five percent stakeholder in Riviera. "I think that gave rise to a level of comfort with the credibility of the offer."
He had also worked before with Dune Capital, a fund with investment by billionaire George Soros, on the Cosmopolitan, a project which is already 11 stories high on the Strip, he said. Later, he bought out Dune’s interest in the Cosmopolitan. In the current arrangement, Dune would issue a loan that could convert into a 50 percent equity stake in the Riviera property, he said.
The latest comments come after an acrimonious courtship from Riv Acquisition Holdings, which had moved to replace the Riviera board, but withdrew the bid on Monday. Shareholders voted approximately 90 percent in favor of the current board at Tuesday’s annual shareholders’ meeting in Las Vegas, Westerman said.
Riv Acquisition had offered us$ 27 a share for the company, and said Monday it was considering a bid that was above us$ 30. Riviera’s board has said because Riv Acquisition attempted to lock up certain major shareholders, it broke state antitrust laws and is prohibited from bidding again for three years. The issue is now before the courts.
Westerman said Riviera executives would review the Eichner group’s bid on Wednesday with Jefferies & Co., which it hired to explore strategic and financial alternatives, including a possible sale of the company.
Riviera shares dropped us$ 1.70, or 4.9 percent, to us$ 33 on Tuesday. In December, Eichner walked away from a us$ 21 per share offer for the company, which also owns the Black Hawk casino near Denver, after the share price rose above the offer.
He said while Riviera may push for a higher price, he did not expect the company to reject the bid if no other credible bidder emerged. "Big difference between us$ 21 and us$ 30. Not a big difference between us$ 30 and us$ 31," he said. "In the absence of anything credible, it wouldn’t seem like a very thoughtful thing to lose it."