SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 31, 1998
Riviera Holdings Corporation
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(Exact Name of Registrant as Specified in Charter)
Nevada 00021430 88-0296885
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(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation No.)
2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (702) 734-5110
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(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
Item 5 Other Events
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As reported on the registrant's Form 8-K filed with the Securities and
Exchange Commission (the "Commission") on September 29, 1997, on September 15,
1997, the registrant entered into an Agreement and Plan of Merger ("the Riviera
Merger Agreement") with R&E Gaming Corp. ("R&E Gaming") and Riviera Acquisition
Sub, Inc. ("RAS"), entities controlled by Allen E. Paulsen, pursuant to which
the registrant would be acquired by R&E Gaming and the registrant stockholders
would receive $15 per share in cash for each share of the registrant's common
stock owned by them, plus an amount equal to 7% per annum from June 1, 1997 to
the date of the closing.
On March 20, 1998, the registrant was notified (the "Termination Notice") by
Mr. Paulson on behalf of R&E Gaming and RAS that the Riviera Merger Agreement is
void and unenforceable against R&E Gaming and RAS, or alternatively, of their
intention to terminate the Riviera Merger Agreement. A copy of the Termination
Notice was filed as an exhibit to the registrant's Form 10-K filed with the
Commission on March 30, 1998.
On March 31, 1998, the registrant notified R&E Gaming that the registrant
rejects the claims made by R&E Gaming in the Termination Notice. See Letter from
the registrant to R&E Gaming Corp. dated March 31, 1998, attached as Exhibit
99.1.
On April 2, 1998, R&E Gaming notified the registrant that R&E Gaming had
terminated the Riviera Merger Agreement. See Letter from R&E Gaming Corp. to the
registrant dated April 2, 1998, attached as Exhibit 99.2. R&E Gaming then
notified the State Street Bank and Trust Company ("the Escrow Agent") of the
notice of termination and requested that all funds held in escrow be returned to
R&E Gaming. See Letter from R&E Gaming Corp. to the State Street Bank and Trust
Company dated April 2, 1998, attached as Exhibit 99.3.
The registrant sent a letter to Mr. Paulson, also on April 2, 1998,
providing notice that it was terminating the Riviera Merger Agreement. See
Letter from the registrant to R&E Gaming Corp. dated April 2, 1998, attached as
Exhibit 99.4. The registrant then sent a letter to the Escrow Agent providing
notice that the Riviera Merger Agreement was terminated by the registrant and
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<PAGE>
requesting that all funds held in escrow be delivered to the regisrant. See
Letter from the registrant to the State Street Bank and Trust Company dated
April 2, 1998, attached as Exhibit 99.5.
On April 3, 1998, the registrant issued a press release relating to the
foregoing events. See Press Release dated April 3, 1998, attached as Exhibit
99.6.
On April 6, 1998, R&E Gaming again provided notice to the registrant that
R&E Gaming had terminated the Riviera Merger Agreement, such notice being in
addition to the notice of termination provided by R&E Gaming on April 2, 1998.
See Letter from R&E Gaming Corp. to the registrant, dated April 6, 1998,
attached as Exhibit 99.7.
3 of 5
<PAGE>
Item 7 Financial Statements, Pro Forma Financial Information
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and Exhibits
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(c) Exhibits
99.1 Letter from the registrant to R&E Gaming Corp., dated
March 31, 1998.
99.2 Letter from R&E Gaming Corp. to the registrant, dated
April 2, 1998.
99.3 Letter from R&E Gaming Corp. to the State Street Bank and
Trust Company, dated April 2, 1998.
99.4 Letter from the registrant to R&E Gaming Corp., dated
April 2, 1998.
99.5 Letter from the registrant to the State Street Bank and Trust
Company, dated April 2, 1998.
99.6 Press Release, dated April 3, 1998.
99.7 Letter from R&E Gaming Corp. to the registrant,
dated April 6, 1998.
4 of 5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RIVIERA HOLDINGS CORPORATION
(Registrant)
Date: April 7, 1998 /s/Duane Krohn
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(Signature)
Duane Krohn,
Treasurer and Chief Financial Officer
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<PAGE>
EXHIBITS INDEX
Exhibit
Number Description
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99.1 Letter from the registrant to R&E Gaming Corp., dated
March 31, 1998.
99.2 Letter from R&E Gaming Corp. to the registrant, dated
April 2, 1998.
99.3 Letter from R&E Gaming Corp. to the State Street Bank and
Trust Company, dated April 2, 1998.
99.4 Letter from the registrant to R&E Gaming Corp., dated
April 2, 1998.
99.5 Letter from the registrant to the State Street Bank and Trust
Company, dated April 2, 1998.
99.6 Press Release, dated April 3, 1998.
99.7 Letter from R&E Gaming Corp. to the registrant,
dated April 6, 1998.
Riviera Hotel & Casino
2901 Las Vegas Blvd. So.
Las Vegas, NV 89109-1931
William L. Westerman
Chairman of the Board
Chief Executive Officer
March 31, 1998
R&E Gaming Corporation
P.O. Box 9660
Rancho Santa Fe, CA 92067
Attention: Allen E. Paulson
Gentlemen:
In your letter to us, dated March 20, 1998, you assert that the Agreement and
Plan of Merger between us ("Riviera"), dated as of September 15, 1998 (the
"Riviera Merger Agreement") is void and unenforceable. Riviera rejects your
claim that the Riviera Merger Agreement is void and unenforceable. Riviera also
rejects as categorically false each of the alleged breaches cited in your
letter.
All capitalized terms used herein have the same meanings as in the Riviera
Merger Agreement.
Your repudiation of your obligations under the Riviera Merger Agreement as set
forth in the March 20, 1998 letter constitutes a breach of your obligations
under the Riviera Merger Agreement.
Your failure to pay the March 15 Additional Consideration as contemplated by
Section 1.98(a) of the Riviera Merger Agreement also constitutes a breach of the
Riviera Merger Agreement.
You have breached your obligations under Sections 3.4 and 3.6 of the Riviera
Merger Agreement in that the information you supplied for inclusion in Riviera's
proxy material concerning fee arrangements with Jefferies & Company, Inc. was
inaccurate in a material respect.
Furthermore, under Section 4.7 of the Riviera Merger Agreement you should have
advised Riviera of your claim that Riviera breached an obligation to you with
respect to Jefferies since your representatives were aware of the Jefferies fee
arrangements described in the Riviera proxy
<PAGE>
R&E Gaming Corporation
March 31, 1998
Page 2
material for at least three and a half months (and perhaps a longer period),
prior to the mailing to Riviera stockholders on January 14, 1998 of the
definitive proxy material with respect to the Riviera Merger. Instead, you chose
to assert this as a breach by Riviera after "Paulson had lost his appetite" to
acquire Riviera.
You have breached your obligation under Section 3.7 of the Agreement; you have
ignored our repeated requests for information as to your financial capacity and
it is clear that on the Closing Date, scheduled for no later than April 1, 1998,
you will not have cash or immediately available funds in an amount not less than
the sum of (i) the aggregate amount of Merger consideration to be paid under the
Agreement and (ii) the aggregate amount to be paid at the Effective Time
pursuant to Section 1.10 of the Agreement.
You have breached your obligations under Section 3.2(b) and 4.4 of the Riviera
Merger Agreement. You have not obtained all necessary Gaming approvals required
by the Gaming Authorities. Your filings with the Gaming Authorities are
incomplete and contain inaccurate information, including that related to your
obligations vis-a'-vis Elsinore Corporation and its stockholders.
Under Section 6.2(c) of the Riviera Merger Agreement, Mr. Allen E. Paulson has
not lived up to his obligation to pursue vigorously and give complete and prompt
attention to requests of Gaming Authorities for information and has done, or
failed to have done, things which have delayed receipt of all necessary Gaming
Authorities' approvals.
All of the foregoing entitle Riviera to terminate the Riviera Merger Agreement
pursuant to Section 6.1(e)(i) and (ii) of the Riviera Merger Agreement and under
Section 6.1(c) of the Riviera Merger Agreement since it is clear from your
repudiation and notice of intent to terminate that you do not intend to close by
April 1, 1998 (although Riviera remains ready, willing, and able to do so).
RIVIERA HOLDINGS CORPORATION
By:/s/ William L. Westerman
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William L. Westerman, Chairman
cc: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, CA 90071
Fax: (213) 687-5600
Brian J. McCarthy, Esq.
R&E GAMING CORP.
P.O. Box 9660
Rancho Santa Fe, California 92067
April 2, 1998
VIA FACSIMILE (702) 794-9277 AND U.S. MAIL
Riviera Holdings Corporation
2901 Las Vegas Boulevard
South Las Vegas, Nevada 89109
Attention: Mr. William L. Westerman
Re: Agreement and Plan of Merger re Riviera Holdings Corporation
Dear Mr. Westerman:
On March 20, 1998 R&E Gaming Corp. ("R&E Gaming") provided Riviera
Holdings Corporation ("RHC") written notice ("March 20th Notice") that, by
reason of fraud in the inducement and other circumstances set forth in such
notice, the Agreement and Plan of Merger dated as of September 15, 1997 (the
"Riviera Merger Agreement") by and among R&E Gaming, Riviera Acquisition Sub,
Inc. ("RAS") and RHC is void.
The March 20th Notice provided further that, if the Riviera Merger
Agreement is not void, RHC was being put on notice, pursuant to Section 6.1(d)
of the Riviera Merger Agreement, that RHC was in breach of the Riviera Merger
Agreement.
Except as otherwise defined in this letter, capitalized terms
used in the remainder of this letter have the same meaning as set forth in the
Riviera Merger Agreement.
Pursuant to Section 6.1(c) R&E Gaming and RAS hereby terminate the
Riviera Merger Agreement for the following reasons:
- The Riviera Merger did not occur by April 1, 1998 because:
** the required approvals of one or more of the Gaming
Authorities have not been obtained and such Gaming
Authorities have not informed Mr. Allen E. Paulson or
R&E Gaming that a review of the applications for such
approvals is scheduled by the appropriate Gaming
Authorities for a later date;
<PAGE>
Riviera Holdings Corporation
April 2, 1998
Page 2
** The actual Consolidated EBITDA reflected in the
consolidated statement of operations of the Company for
the Projected Period has declined by 7.5% or more when
compared to the projected results for the Projected
Period, after giving effect to recalculation of earnings
to reflect reversal of cost reductions achieved through
changes in the conduct of RHC's business from its
ordinary course of business consistent with past
practice, which changes are violations of Section 2.8
and 4.1, respectively, of the Riviera Merger Agreement.
Such changes include, but are not limited to, materially
changing hotel housekeeping operations; materially
reducing advertising expenditures; eliminating service
personnel; manipulating and reducing expenditures
regarding the Black Hawk project in Colorado; and
** As set forth in the March 20th Notice, the Riviera
Option Agreement is void and, therefore, is not and was
not on April 1st in full force and effect and, in any
event, the Option Sellers have not complied in all
respects with the terms thereof in that a Seller,
Morgens, Waterfall, Vintiadis & Company, Inc. ("Morgens,
Waterfall"), was at the time of the execution of the
Riviera Option Agreement, and at least until recently
has been, a party to an agreement or understanding that
would make it subject to a valid claim of a broker,
investment banker, finder or other intermediary in
connection with the Option and Voting Agreement (the
"Elsinore Option Agreement") dated as of September 15,
1997 by and between R&E Gaming and Morgens, Waterfall.
The Elsinore Option Agreement is contemplated by Section
5.1(b) of the Riviera Option Agreement and, therefore,
such agreement or understanding is a violation of
Section 2.1(e) of the Riviera Option Agreement.
Please be further advised that, as set forth in the March 20th
Notice, RHC has breached representations, warranties and covenants of the
Riviera Merger Agreement. No cure has taken place or can take place of such
breaches and, accordingly, R&E Gaming and RAS hereby terminate the Riviera
Merger Agreement pursuant to Section 6.1(d) for the reasons set forth in the
March 20th Notice.
In accordance with the terms of Section 6.2 of the Riviera Merger
Agreement such Agreement has forthwith become void and has no effect, except
that RHC continues to be subject to the terms of Section 6.3 thereof.
Because the termination effected by this notice constitutes a
Non-Payment Termination Event, as defined in the Riviera Option Agreement, no
RHC stockholder is entitled to any funds under the Riviera Merger Agreement or
from the Escrow Agreement ("Escrow
<PAGE>
Riviera Holdings Corporation
April 2, 1998
Page 3
Agreement") dated as of September 15, 1997, by and among R&E Gaming, RHC and
State Street Bank and Trust Company of California, N.A. R&E Gaming and RAS
hereby demand, therefore, repayment of all monies paid and return of the Letter
of Credit delivered by R&E Gaming in connection with the Escrow Agreement and
the transactions contemplated thereby.
Very truly yours,
R&E GAMING CORP.
By: /s/ Allen E. Paulson
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Allen E. Paulson
President
RIVIERA ACQUISITION SUB, INC.
By: /s/ Allen E. Paulson
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Allen E. Paulson
President
cc: Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Facsimile: (212) 698-3599
Attention: Fredric Klink, Esq.
R&E GAMING CORP.
P.O. Box 9660
Rancho Santa Fe, California 92067
April 2, 1998
VIA FACSIMILE (213) 362-7357 AND U.S. MAIL
State Street Bank and Trust Company
of California, N.A.
725 South Figueroa Street, Suite 3100
Los Angeles, California 90017
Attention: Corporate Trust Department
(R&E Gaming Corp. 1997 Escrow)
Re: Escrow Agreement
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Dear Sirs:
Pursuant to Section 1 of the Escrow Agreement ("Escrow Agreement")
dated as of September 15, 1997, by and among R&E Gaming Corp. ("R&E Gaming"),
Riviera Holdings Corporation and State Street Bank and Trust Company of
California, N.A., R&E Gaming hereby gives you notice that the Agreement and Plan
of Merger ("Riviera Merger Agreement") entered into by Riviera Acquisition Sub,
Inc., R&E Gaming and Riviera Holdings Corporation ("RHC") has been terminated in
accordance with Article VI thereof as of the date hereof. Enclosed is a copy of
the notice of termination ("Riviera Termination") which was delivered today by
R&E Gaming of RHC. The Riviera Termination should be considered the certificate
required by Section 1 of the Escrow Agreement.
Please be further advised that, as set forth in the Riviera
Termination, the Riviera Merger Agreement has been terminated pursuant to a
termination event which is a Non-Payment Termination Event as defined in Section
3 of the Escrow Agreement. Accordingly, in accordance with the terms of Section
4 of the Escrow Agreement you are hereby requested to deliver the Escrow
Consideration (as defined in the Escrow Agreement), together with the Cash
Interest (as defined in the Escrow Agreement), promptly to R&E Gaming. Further,
the escrow shall be deemed to have terminated.
<PAGE>
State Street Bank and Trust Company
of California, N.A.
April 2, 1998
Page 2
As required by Section 4 of the Escrow Agreement, a copy of this
notice is being delivered simultaneously to RHC.
Very truly yours,
R&E GAMING CORP.
By: /s/ Allen E. Paulson
-----------------------------
Allen E. Paulson
President
Enclosure
cc: Riviera Holdings Corporation
2901 Las Vegas Boulevard
South Las Vegas, Nevada 89109
Facsimile: (702) 794-9277
Attention: Mr. William L. Westerman
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Facsimile: (212) 698-3599
Attention: Fredric Klink, Esq.
RIVIERA HOLDINGS CORPORATION
William L. Westerman
Chairman of the Board
April 2, 1998
R&E Gaming Corporation
P.O. Box 9660
Rancho Santa Fe, CA 92067
Gentlemen:
Reference is made to our letter to you dated March 31, 1998 ("3/31 Letter") and
your letter to us dated April 2, 1998 ("4/2 Letter"). For the reasons set forth
in the 3/31 Letter and in light of the 4/2 Letter, you are hereby notified,
under Section 6.1(e)(i) and (ii) and Section 6.1(c) of the Riviera Merger
Agreement that Riviera terminates the Riviera Merger Agreement. There obviously
remains no issue as to R&E's ability or intent to cure the defaults specified in
the 3/31 Letter and, accordingly, Riviera intends to notify the escrow agent
that it is entitled to all amounts being held in escrow and to demand that the
escrow agent cash all letters of credit held in escrow.
Very truly yours,
RIVIERA HOLDINGS CORPORATION
By: /s/ William L. Westerman
------------------------
William L. Westerman
cc: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, CA 90071
Fax: (213) 687-5600
Attention: Brian J. McCarthy, Esq.
Musick, Peeler & Garrett LLP
One Wilshire Blvd.
Los Angeles, CA 90017-3383
Fax: (213) 624-1376
Attention: Richard P. Crane, Jr., Esq.
RIVIERA HOLDINGS CORPORATION
William L. Westerman
Chairman of the Board
April 2, 1998
State Street Bank and Trust Company of California, N.A.
725 South Figueroa Street
Suite 3100
Los Angeles, CA 90017
Attention: Corporate Trust Department
R&E Gaming Corp. 1997 Escrow)
Gentlemen:
All capitalized terms, which are not defined herein, have the same meaning as in
the Escrow Agreement.
Riviera Holdings Corporation (the "Company") hereby certifies that the Riviera
Merger Agreement has been terminated by the Company pursuant to termination
events each of which is not a Non-Payment Termination Event. You are requested
to deliver notice to the LC Issuers as provided in the Letters of Credit and,
upon receipt of the funds from the Letters of Credit, shall deliver such funds,
together with the Cash Interest (as defined in the Escrow Agreement) promptly to
the Company.
The foregoing will constitute the company Certificate required by Section 3 of
the Escrow Agreement.
Referring to the letter to you dated April 2, 1998 from R&E Gaming Corp.
("Gaming"), please be advised that this letter shall also constitute the Company
Contesting Certificate by which the Company contests Gaming's demands set forth
in its letter of April 2, 1998. You are hereby directed not to return the
Letters of Credit, or any other proceeds, held in escrow to R&E Gaming Corp.
Very truly yours,
RIVIERA HOLDINGS CORPORATION
By: /s/ William L. Westerman
-------------------------
William L. Westerman
<TABLE>
<CAPTION>
<S> <C>
cc: Skadden, Arps, Slate, Meagher & Flom LLP Musick, Peeler & Garrett LLP
300 South Grand Avenue, Suite 3400 One Wilshire Blvd.
Los Angeles, CA 90071 Los Angeles, CA 90017-3383
Fax: (213) 687-5600 Fax: (213) 624-1376
Attention: Brian J. McCarthy, Esq. Attention: Richard P. Crane, Jr., Esq.
</TABLE>
NEWS RE: Riviera Holdings Corporation
BULLETION 2901 Las Vegas Boulevard South
Las Vegas, NV 89109
From: Investor Relations: (800) 362-1460
FRB Fax: (702) 794-9442
Hotel: (702) 734-5110
TRADED: AMEX - RIV
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The Financial Relations Board, Inc.
FOR FURTHER INFORMATION:
AT THE COMPANY: AT FINANCIAL RELATIONS BOARD:
Duane Krohn, Treasurer and CFO Betsy Truax (general information)
(702) 794-9527 (208) 233-8323
John Wishon, Secretary and General Counsel
(702) 794-9504
FOR IMMEDIATE RELEASE
FRIDAY, APRIL 3, 1998
RIVIERA ANNOUNCES MERGER TERMINATION
LAS VEGAS, NV -- April 3, 1998 -- R&E Gaming Corp. has notified Riviera
Holdings Corporation that, as previously threatened, R&E has terminated
the Riviera Merger Agreement, dated September 15, 1997. Riviera has
rejected R&E's specious allegations and has notified R&E of R&E's own
breaches which entitle Riviera to collect the approximately $6 million
being held in escrow. Most of the escrow is in the form of letters of
credit being held by the escrow agent. Riviera has begun the process of
collecting the escrow, which it expects will be contested by R&E. If
Riviera is successful, it intends to distribute the escrow proceeds to
its stockholders, excluding Paulson, Morgens Waterfall, Sun Life and
Keyport Life, which hold approximately 70% of the presently outstanding
Riviera stock.
Riviera Holdings Corporation owns and operates the Riviera Hotel & Casino
on the Las Vegas Strip, operates the Four Queens Hotel and Casino in
downtown Las Vegas and is developing a casino in Black Hawk, Colorado.
Riviera Holdings Corporation is traded on the American Stock Exchange
under the symbol RIV.
For more information on Riviera, dial 1-800-PRO-INFO, code RIV.
# # #
R&E GAMING CORP.
P.O. Box 9660
Rancho Santa Fe, California 92067
April 6, 1998
VIA FACSIMILE (702) 794-9277 AND U.S. MAIL
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Riviera Holdings Corporation
2901 Las Vegas Booulevard
South Las Vegas, Nevada 89109
Attention: Mr. William L. Westerman
Re: Agreement and Plan of Merger re Riviera Holdings Corporation
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Dear Mr. Westerman:
On March 20, 1998, R&E Gaming Corp. ("R&E Gaming") provided Riviera
Holdings Corporation (RHC") written notice ("March 20th Notice") pursuant to
Seciton 6.1(d) of the Agreement and Plan of Merger dated as of September 15,
1997 (the "Riviera Merger Agreement") by and among R&E Gaming, Riviera
Acquisition Sub, Inc. ("RAS") and RHC that RHC was in breach of representations,
warranties and covenants of the Riviera Merger Agreement. No cure has taken
place of such breaches and, accordingly, R&E Gaming and RAS hereby terminate the
Riviera Merger Agreement pursuant to Section 6.1(d) for the reasons set forth in
the March 20th Notice. This notice is in addition to the termination notices
given to you on April 2, 1998.
In accordance with the terms of Section 6.2 of the Riviera Merger
Agreement such Agreement has forthwith become void and has no effect, except
that RHC continues to be subject to the terms of Section 6.3 thereof.
Because the termination effected by this notice constitutes a
Non-Payment Termination Event, as defined in the Riviera Option Agreement, no
RHC stockholder is entitled to any funds under the Riviera Merger Agreement or
from the Escrow Agreement ("Escrow Agreement") dated as of September 15, 1997,
by and among R&E Gaming, RHC and State Street Bank and Trust Company of
California, N.A. R&E Gaming and RAS hereby demand, therefore, repayment of all
monies paid and return of the Letter of Credit delivered
<PAGE>
Riviera Holdings Corporation
April 6, 1998
Page 2
by R&E Gaming in connection with the Escrow Agreement and the transactions
contemplated thereby.
Very truly yours,
R&E GAMING CORP.
By: /s/ Allen E. Paulson
------------------------------------
Allen E. Paulson
President
RIVIERA ACQUISITION SUB, INC.
By: /s/ Allen E. Paulson
------------------------------------
Allen E. Paulson
President
CC: Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Facsimile: (212) 698-3599
Attention: Fredric Klink, Esq.
