OLSHAN
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
PARK AVENUE TOWER
65 EAST 55TH STREET
NEW YORK, NEW YORK 10022
TELEPHONE: 212.451.2300
May 11, 2007 FACSIMILE: 212.451.2222
WWW.OLSHANLAW.COM
DIRECT DIAL: 212-451-2333
MAIL: AFINERMAN@OLSHANLAW.COM
Ade K. Heyliger
Special Counsel
Officer of Mergers & Acquisitions
United States Securities and Exchange Commission
Washington, DC 20549-0303
Re: RIVIERA HOLDINGS CORPORATION
DEFINITIVE ADDITIONAL MATERIALS
FILED MAY 8, 2007
FILE NO. 000-21430
Dear Mr. Heyliger:
We acknowledge receipt of the letter of comment dated May 10, 2007 from
the Staff (the "Comment Letter") with regard to the above-referenced matter. We
have reviewed the Comment Letter with Riviera Holdings Corporation (the
"Company") and provide the following supplemental response on its behalf. Our
responses are numbered to correspond to your comments.
DEFA14 FILED MAY 8, 2007
GENERAL
1. WE NOTE YOUR STATEMENTS IN THE LETTER TO SHAREHOLDERS THAT THE RIV
ACQUISITION GROUP NOMINEES ARE "SELF-SERVING," "WILL SEEK TO APPROVE A
BELOW-MARKET SALE OF RIVIERA" AND "WILL SEEK TO FORCE A SALE...REGARDLESS
IF [SIC] WHETHER IT IS THE HIGHEST AND BEST PRICE." WE NOTE FURTHER YOUR
IMPLICATION THAT THE GROUP'S NOMINEES WILL NOT "PROTECT THE SHAREHOLDERS"
FROM A LESS THAN BEST ACQUISITION OFFER. SUCH STATEMENTS IMPLY THAT THE
NOMINEES, IF ELECTED, WOULD NOT BE BOUND BY AND WOULD FAIL TO FULFILL
THEIR FIDUCIARY DUTIES. YOU MUST AVOID STATEMENTS THAT DIRECTLY OR
INDIRECTLY IMPUGN CHARACTER, INTEGRITY OR PERSONAL REPUTATION OR MAKE
CHARGES OF ILLEGAL OR IMMORAL CONDUCT WITHOUT FACTUAL FOUNDATION. REFER TO
RULE 14A-9.
We acknowledge your comment. The Company will avoid making statements that
directly or indirectly impugn character, integrity or personal reputation or
make charges of illegal or immoral conduct without factual foundation.
NEW JERSEY OFFICE
744 BROAD STREET, 16TH FLOOR
NEW YORK, NJ 07102
TELEPHONE: 973.331.7200
FACSIMILE: 973.331.7222
May 11, 2007
Page 2
2. EACH STATEMENT OR ASSERTION OF OPINION OR BELIEF MUST BE CLEARLY
CHARCTERIZED AS SUCH, AND A REASONABLE FACTUAL BASIS MUST EXIST FOR EACH
SUCH OPINION OR BELIEF. SUPPORT FOR OPINIONS OR BELIEFS SHOULD BE
SELF-EVIDENT, DISCLOSED IN THE PROXY STATEMENT OR PROVIDED TO STAFF ON A
SUPPLEMENTAL BASIS. IN THIS REGARD, WE NOTE THE FOLLOWING EXAMPLES:
o [THE RIV ACQUISITION GROUP'S] GOAL IS TO INSTALL DIRECTORS WHO WILL
SEEK TO APPROVE A BELOW-MARKET SALE...FOR THEIR OWN PERSONAL GAIN;
AND
o THE IMPLICATION THAT THE RIV ACQUISITION GROUP SEEKS TO TAKE AN
"UNFAIR ADVANTAGE OF THE SHAREHOLDERS."
We acknowledge your comment. The Company will clearly characterize any
statements or assertions of opinion or belief as such and will ensure that there
is a reasonable factual basis for each opinion or belief stated.
IMPORTANT FACTS TO KNOW
3. WE NOTE STATEMENTS THROUGHOUT YOUR MATERIALS IN WHICH YOU ASSERT YOUR
BELIEF THAT RIV ACQUISITION GROUP WILL ATTEMPT TO ACQUIRE THE COMPANY AT A
"BELOW-MARKET PRICE." WE NOTE FURTHER YOUR STATEMENTS REGARDING THE
"ENORMOUS APPRECIATION" OF VALUES IN LAS VEGAS AND THE REFERENCE TO
COMPANY'S "TRUE VALUE." PLEASE PROVIDE SUPPORT FOR THESE STATEMENTS AND
QUANTIFY ANY ANALYSES PERFORMED TO SUPPORT THESE STATEMENTS. TO THE EXTENT
ANY SUCH ANALYSES HAVE NOT BEEN PERFORMED, SO STATE.
The current Riv Acquisition group offer is for $27 per share. As of the
close of business on May 10, 2007 the Riviera stock price was at $31.85 per
share. In addition, on May 11, 2007 an offer to acquire the stock of the Company
for $30.00 per share was received by the Company. Accordingly, the Company
believes that the market views the Riv Acquisition group offer as below market.
Based on data internally compiled, Las Vegas strip land prices averaged
approximately $19.1 million per acre in 2005 and so far in 2007, have increased
to approximately $21.1 million per acre. Based on land owned by the Company on
the Las Vegas strip, as well as the Company's strong operating performance, the
Company believes its value is in excess to $27 per share.
4. PLEASE EXPLAIN IN GREATER DETAIL AND PROVIDE SUPPORT FOR YOUR STATEMENT
THAT THE RIV ACQUISITION GROUP HAS SUBMITTED A "HIGHLY CONDITIONAL" OFFER.
The Riv Acquisition group's offer was subject to significant conditions,
including without limitation: (i) obtaining necessary approvals from gaming
authorities in Nevada and Colorado, (ii) obtaining necessary approvals under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) due
diligence, and (iv) financing. The Company believes these conditions are
significant.
5. PLEASE RECONCILE YOUR STATEMENT THAT THE RIV ACQUISITION GROUP "REFUSES TO
ENGAGE IN CONSTRUCTIVE NEGOTIATIONS" WITH YOUR STATEMENT THAT YOU HAVE
ENGAGED IN "EXTENSIVE NEGOTIATIONS" WITH THE GROUP.
May 11, 2007
Page 3
In 2005 the Company conducted an extensive auction process in which,
through its financial advisor, Jefferies & Companies, the Company reviewed in
excess of 100 bids from interested parties, including strategic and financial
buyers. Out of those bids the Company selected a bid for $23 per share from a
group whose members included the Riv Acquisition group. After signing an
exclusivity contract with the Company the Riv Acquisition group lowered its
offer to $15 per share, an offer which was ultimately increased to $17 per
share, and rejected by stockholders. Following the collapse of that offer the
Company has continued its negotiations with the Riv Acquisition group to sell
the Company, which were continuing until quite recently. Some time after
stockholders rejected its $17 per share offer, the Riv Acquisition group
proposed a tender offer. However, after the Company expressed interest in a
tender offer structure because it would permit stockholders to make a decision
without coercive pressure or other lock-ups, the Riv Acquisition group changed
their position, and eventually countered with its current offer, for an
acquisition through a merger agreement which would preclude the Company from
soliciting offers from other bidders. In addition, the Riv Acquisition group
also entered into the Option Agreement (as discussed below), which the Company
believes is similar to a lock-up arrangement in many respects. The Company
believes the price changes, as well as the changes in form of the acquisition
are examples of the Riv Acquisition group's failure to engage in constructive
negotiations.
6. PLEASE EXPLAIN WHY YOU BELIEVE THE RIV ACQUISITION UP'S OFFER WOULD
"PRECLUDE OTHER BIDDERS FROM SUBMITTING HIGHER AND BETTER OFFERS." FOR
EXAMPLE, TELL US WHETHER THE OFFER LACKS A "GO-SHOP" PROVISION.
The Company understands that the Riv Acquisition group written proposal
lacks a "go-shop" provision. In addition, Riv Acquisition group has signed an
option agreement ("Option Agreement") with Triple Five Invest Co. LLC and
Dominion Financial LLC (together "T5") pursuant to which they granted Riv
Acquisition group the option to acquire 1,147,550 of the Company's shares. The
agreement also requires T5 to vote against any action or proposal that would
result in an acquisition of Riviera by any party other than Riv Acquisition
group or its affiliates. The Company believes that the Option Agreement serves
as a lock-up in many respects.
YOUR BOARD IS WORKING TO MAXIMIZE SHAREHOLDER VALUE
7. WE NOTE YOUR STATEMENT THAT YOUR FINANCIAL ADVISOR HAS CONTACTED OVER 100
PARTIES REGARDING A POTENTIAL ACQUISITION OF THE COMPANY. PLEASE TELL US
WHEN THOSE CONTACTS OCCURRED AND UPDATE AS TO THE RESULTS OF THOSE
CONTACTS, INCLUDING THE TYPES OF ENTITIES CONTACTED, THE CRITERIA USED TO
IDENTIFY THESE ENTITIES AND WHETHER YOU ENTERED INTO ANY SERIOUS
NEGOTIATIONS WITH ANY OF THE POTENTIAL BIDDERS.
As discussed above, there were many companies involved in the initial
auction process that the Company began in 2005, with the aid of its financial
advisor, Jeffries & Company. Through the auction process the Company contacted
over 100 companies representing a wide range of industries. The Company received
bids from approximately nine potential buyers and ultimately selected the
highest offer, valued at $23 per share, from a group whose members included the
Riv Acquisition group. However, after the Company entered into an exclusivity
contract with the group at $23, the bid price was lowered and was eventually
rejected by stockholders at $17 per share.
May 11, 2007
Page 4
In connection with responding to the Staff's comments, a certificate
signed by a representative of the Company containing the three acknowledgments
requested by the Staff is attached hereto.
The Staff is invited to contact the undersigned with any comments or
questions it may have. We would appreciate your prompt advice as to whether the
Staff has any further comments.
Sincerely,
/s/ Adam W. Finerman
--------------------------------------
Adam W. Finerman, Esq.
May 11, 2007
Page 5
ACKNOWLEDGMENT
In connection with responding to the comments of the Staff of the
Securities and Exchange Commission ("SEC") relating to the definitive additional
materials filed by Riviera Holdings Corporation on May 8, 2007 (the "Additional
Materials"), the undersigned acknowledges the following on behalf of the
foregoing persons:
o The Company is responsible for the adequacy and accuracy of the
disclosure in the Additional Materials.
o The Staff's comments or changes to disclosure in response to Staff
comments do not foreclose the SEC from taking any action with
respect to the Additional Materials.
o The Company may not assert Staff comments as a defense in any
proceeding initiated by the SEC or any person under the federal
securities laws of the United States.
Dated: May 11, 2007 RIVIERA HOLDINGS CORPORATION
By: /s/ Mark Lefever
---------------------------------------
Name: Mark Lefever
Title: Treasurer and Chief Financial Officer
