Despite Hilton Hotels’ sale of its new Atlantic City, N.J., hotel-gambling complex over the weekend, Golden Nugget said Monday that it still wants to buy a controlling 27.4% block of Hilton’s stock tied up in a probate court dispute.
However, Golden Nugget Vice President Bruce Levin added that Hilton’s sale of what he called its “crown jewel” probably would cause his company to “re-evaluate” the Hilton company “if they ever disclose the specifics of the sale.”
Golden Nugget offered April 3 to pay $72 a share, or $488 million cash, for the block but was rebuffed by the executor of the Conrad Hilton estate.
After announcing the sale of its nearly completed Atlantic City hotel to New York developer Donald Trump for a “small profit” on its investment of about $308 million, Beverly Hills-based Hilton now can concentrate on a worrisome legal war in Los Angeles.
‘Prudent Business’ Decision
The sale ends Hilton’s problems in New Jersey, enabling it to avoid the scheduled opening Monday of hearings in its effort to overturn the state Casino Control Commission’s Feb. 28 ruling that it is unfit to hold a casino license. The licensing battle would have been a crucial one for Hilton.
Barron Hilton, commenting on the sale to Trump, said: “Our action was a prudent business determination made easier by Mr. Trump’s assurance that the Hilton employees (there) will be protected.”
The Trump organization, which said it will retain all of the about 500 people hired by Hilton for the project and hire another 4,000 in coming weeks, already owns half of another Atlantic City casino, the Trump Plaza Casino Hotel. Its partner is Harrah’s, a subsidiary of Memphis, Tenn.-based Holiday Inns.
Hilton now faces crucial court hearings in Los Angeles on Wednesday and Thursday, virtually on the eve of its scheduled annual meeting next Monday.
As part of Golden Nugget’s moves on Hilton, the Las Vegas-based casino operator is seeking in U.S. District Court here to prevent Hilton from adopting so-called shark repellent proposals at the meeting.
The California attorney general has a parallel effort in Los Angeles County Superior Court to bar the executor of the Conrad Hilton estate from voting its 27.4% holding in favor of Hilton Hotels’ anti-takeover measures.
Charities May Be Hurt
The first hearing, before Superior Court Judge Robert Weil, is on the issue of whether James E. Bates, executor of the Conrad Hilton estate, will be allowed to vote the 27.4% block in favor of the anti-takeover proposals.
The state attorney general’s charitable trust division, in papers filed with the court, said passage of the Hilton Hotels anti-takeover proposals would have an adverse effect on charities’ interests by depressing Hilton’s stock price.
The bulk of Conrad Hilton’s estate was left to a charitable foundation after he died. His son, Barron Hilton, chairman of the company, has argued to the court that he has a right to buy the nearly 6.8 million shares for about $24 each, compared to the current market price of about $68. The state said Barron Hilton would receive “a windfall” of more than $270 million if he prevails in his claim.
The second court date, on Thursday, is a hearing before U.S. District Judge Matt Byrne on Golden Nugget’s request for a preliminary injunction against Hilton Hotels. Among other things, Golden Nugget seeks to bar management from voting its proxies at the annual meeting without major revisions of its published proxy material.
Levin, who also is general counsel of Golden Nugget, said of the two court hearings: “In effect, we’ve got two bites at the apple.”