Resorts Deal Is Ended Abruptly; Griffin and Trump Point Fingers
It was right out of his best-selling “The Art of the Deal” as New York financier Donald J. Trump on Wednesday dramatically called off negotiations to complete his April 14 handshake agreement to sell Resorts International to Los Angeles producer Merv Griffin.
Basically, the parties fell out over how to divide about $50 million worth of the casino operator’s assets and liabilities, according to a Griffin attorney working on the transaction.
Negotiations were complicated by a provision of the deal that Trump would buy one of Resorts’ two Atlantic City casinos, the vast and uncompleted Taj Mahal.
Whether the collapse of talks proves to be temporary or final, Griffin made it clear that he intends to pursue his efforts to buy Resorts. He said he plans to negotiate with the firm’s outside directors.
The tentative agreement had called for Griffin to pay public shareholders $36 a share for Resorts’ 5.7 million Class A shares and an undisclosed premium for Trump’s Class B shares, which have 100 times the voting power of Class A shares. Trump paid $135 each for his 95% of the 752,297 Class B shares.
Sides Trade Barbs
Each side accused the other Wednesday of causing the deal to blow up.
The exchange opened with Trump issuing a press release putting the chief blame on what he said was Griffin’s “inability to prove that he is able to finance” the purchase. In addition, Trump said, the two parties were unable to agree on various terms and details of the April 14 “conceptual agreement.”
He went on to claim that the Griffin camp “attempted to reduce their financial commitment by trying to renegotiate the deal” and “this was not acceptable to us.”
Griffin unleashed a counter-barrage of public relations with a statement from Michael Nigris, president of Griffin Co., the producer’s investment firm.
Financing was “never an issue” in the negotiations, Nigris said, adding: “Indeed, the impasse arose from Mr. Trump’s refusal to abide by the original terms of the deal and to accept the fact that the existing Resorts hotel-casino would remain a viable competitor.”
Harvey T. Freeman, vice president of Trump Organization, insisted in a brief interview that the Griffin camp made 11th-hour demands to change terms.
A version of the hang-up was outlined in some detail later by Thomas E. Gallagher, a New York attorney for Griffin, who said it was “a classic example of negotiating with Donald Trump.”
The cutoff date for determining Resorts’ liabilities that were to be assumed by Trump was understood to be last Dec. 31, Gallagher said, but Trump subsequently wanted to make the date March 31. The effect of that, the lawyer said, would be to increase the amount of liabilities remaining with Resorts.
He said the other issue was the allocation of a parking garage building under construction. Instead of being intended solely for the Taj Mahal, he said investigation showed that 1,200 of the 2,000 spaces were allocated to the operating Resorts International Casino Hotel.
Asks $300 a Share
Nigris told Trump in a meeting Wednesday that Trump would have to pay more if he wanted the division of liabilities and assets his way, Gallagher reported.
According to this account, Trump countered by suggesting that Griffin “forget” the previous deal and pay him $300 each for his Class B shares.
That last proposal, said Gallagher, showed that Trump’s raising of the financing as an issue was “a pure red herring.” The attorney said he believes that the outside directors of Resorts will have a “different perspective” from Trump in dealing with Griffin.
Commenting on Griffin’s pledge to continue to try to buy Resorts and to negotiate with the outside directors, Trump executive Freeman said:
“He will not be successful in any attempts to purchase the company without our approval. We will prevail in any litigation that ensues. We don’t believe that his position has merit and are prepared to battle it.”
A New York attorney for institutional holders of Resorts’ Class A stock, William Klein II, commented in the wake of Wednesday’s developments: “A Class A shareholder might as well be in a leper colony.”
