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Golden Nugget Denied Injunction : Court Clears Way for Hilton Vote on Anti-Takeover Plan

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Times Staff Writer

A federal judge here turned down Las Vegas-based Golden Nugget’s bid Thursday for a preliminary injunction that could have postponed Monday’s vote by Hilton Hotels’ stockholders on several anti-takeover defenses.

Even before the court hearing, Golden Nugget had heated up its efforts against Hilton management’s so-called shark repellent proposals by launching a full-fledged proxy fight.

The Las Vegas-based gambling firm, recently rebuffed in seeking to buy a controlling 27.4% block of Hilton stock, hired New York proxy fighter Carter & Co. and mailed material to Hilton stockholders urging them to defeat the proposals Monday.

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Among other things, Golden Nugget gave detailed instructions on how to cast its proxy votes by Western Union Datagram.

Golden Nugget’s mailing also featured information that it contended in its suit had been insufficiently covered in Hilton management’s proxy.

Included in the material was information on what it called Hilton’s “New Jersey debacle.” It also pointed out prominently Hilton Chairman Barron Hilton’s claim of an option to buy for $24 each the 6.8 million Hilton Hotel shares held by the Conrad Hilton estate--for which Golden Nugget had bid $72 each.

In composite trading on the New York Stock Exchange, Hilton shares closed Thursday at $66.75, down $2.

Hilton Executive Vice President John Giovenco, obviously pleased by the court decision, said he would withhold any comment on the Golden Nugget proxy effort or prediction on the outcome “until the votes are counted Monday.”

U.S. District Judge Matt Byrne ruled Thursday that the Hilton proxy had made no omissions serious enough to grant a preliminary injunction under federal case law.

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Specifically, he held that the Hilton proxy had not misled stockholders by failing to state why New Jersey casino regulators had refused to grant the company a license for its nearly completed Atlantic City hotel-gambling complex Feb. 28.

Commission members, in voting their decision, had criticized Hilton’s senior management for dealing with lawyer Sidney Korshak for years after learning that the U.S. Justice Department had labeled him a “senior adviser” to organized crime groups, as well for its handling of an investigation of accusations about its San Francisco hotel operation.

Byrne noted that the New Jersey Casino Control Commission had agreed to a rehearing of the case before returning its formal written findings. Since then, Hilton has sold the Atlantic City hotel for a “modest profit” on its $308-million cost, and the licensing rehearing has been postponed indefinitely.

The judge also held that the Hilton proxy had sufficient information about Barron Hilton’s claim for the stock in a Los Angeles probate court proceeding without stating the 1979 value as the proper price under his asserted option. His father, Conrad Hilton, who died in 1979, left the bulk of his estate, including the Hilton Hotels stock, to a charitable foundation named after himself.

Golden Nugget’s material sent to Hilton stockholders said Barron Hilton has not stated the basis for his prior statement that its $72-a-share offer to the estate’s executor April 3 was “inadequate.”

The Las Vegas firm, which said it owns 260,010 shares of Hilton’s 24.7 million shares outstanding, told Hilton stockholders that passage of the anti-takeover proposals would make it impossible for Hilton Hotels to accept certain acquisition offers without 75% of the shares unless the current board approved them. Thus, it said, the shares in the Conrad Hilton estate claimed by Barron Hilton would have an effective veto power over such transactions.

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A 75% vote also would be required to remove directors, even if one were convicted of a crime, the Golden Nugget mailing said.

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