Griffin May Sweeten Resorts Bid : Casino Evaluation Prompts Statement; Stock Price Leaps
Hollywood producer Merv Griffin said Monday that he might sweeten his offer for Resorts International based on a newly available evaluation of its casino properties. The statement sparked a new leap in Resorts’ stock price, which in turn could put further pressure on industrialist Donald J. Trump’s bid to take the firm private.
Separately, Griffin filed a lawsuit accusing Trump and other Resorts’ directors of omissions and misrepresentations in his tender offer.
Trump, who controls Resorts through his ownership of most of its Class B stock, offered $22 a share Feb. 1 for the shares he does not own, mostly Class A. Griffin last week offered $35 a share for both Class A and Class B stock.
On Monday, Michael Nigris, president of the Griffin Co., Los Angeles, said the firm had spent the weekend reviewing information made available late last week in a Trump filing with the government. Nigris said it disclosed a $1.3-billion appraisal on the unfinished Taj Mahal casino when it is completed and combined with the existing Resorts’ casino in Atlantic City, N.J.
The appraising company said it was prepared to support a Resorts-guaranteed bank mortgage loan of $550 million on the Taj Mahal, Nigris said, adding: “Based on those numbers, we may be able to sweeten our $225-million bid.”
After the statement, Resorts’ shares rose $3.125 to $28.675 on the American Stock Exchange. Just before Griffin’s offer last Thursday, the price was $21.875.
Offer ‘Illusory’
Last week’s price rise already had increased pressure on representatives of Class A shareholders who previously agreed to accept Trump’s $22 bid, which had been increased from the original $15. Two major institutional investors who are parties to the proposed settlement reportedly have withdrawn their support while they consider the Griffin bid.
Trump said Monday that he will not sell his controlling Class B stock to Griffin “at any price.” Noting that the Griffin offer is contingent on buying Trump’s controlling Class B shares, the New York financier called it “illusory.”
Last Friday, Trump sued Griffin on charges of violating securities laws. Griffin responded Monday with his own action in U.S. District Court in New York.
Griffin Co. said its suit alleges that the property appraisals obtained by Trump and dated Feb. 11 and Feb. 19 were not disclosed in a timely fashion.
When finally disclosed, the appraisals were described in a misleading manner “to support his inadequate $22-per-share offer.” The appraisals were prepared for the undisclosed purpose of obtaining a $550-million mortgage loan from banks, “backed only by a guarantee from Resorts,” Griffin Co. said.
The Griffin firm said its suit also alleged that Trump and the other Resorts’ directors violated their duties to the public by “conducting a patently unfair auction for Resorts” and rejecting a “clearly superior” bid.
The Resorts’ directors also failed to withdraw their approval of Trump’s $22 offer when the new appraisals of the Resorts’ asset were finally disclosed to them, according to Griffin’s report of the suit.
