Riviera Holdings emerged April 1 with $80 million in financing

By Caroline Salls

Pittsburgh, April 7 - Riviera Holdings Corp. emerged from its reorganization proceedings on April 1, according to an 8-K filed Thursday with the Securities and Exchange Commission.

As previously reported, Riviera's plan of reorganization was confirmed on Nov. 17 by the U.S. Bankruptcy Court for the District of Nevada and took effect on Dec. 1.

In connection with the April 1 emergence, the company entered into first-lien and second-lien credit agreements.

Loan terms

Cantor Fitzgerald Securities is the administrative agent on the $60 million first-lien credit agreement, which includes a $50 million term loan and a $10 million working capital revolving loan and matures on April 1, 2016.

Interest will be Libor plus 500 basis points with a 2% floor.

The working capital facility provides for a $5 million letter-of-credit facility and a $2 million swingline loan facility.

Under the plan, holders of the company's credit agreement and senior hedging agreement claims received a portion of the series A term loan.

Cantor Fitzgerald is also the administrative agent on the $20 million second-lien term loan facility.

Interest on the second-lien loan is Libor plus 300 bps, payable in cash, and Libor plus 1,300 bps, payable in kind in interest that will be recapitalized as principal.

Stockholder agreement

Riviera also entered into an agreement with the stockholder holding all of its voting common stock and some holders of a majority of its non-voting common stock.

The stockholders have agreed on the composition of the reorganized company's board of directors and have agreed on governance matters, including director appointment and board observer rights, restrictions on common stock issuance, restrictions on distributions, repurchases and pledges of class B common stock, class B common stock registration rights and rights to indemnification and contribution.

The stockholder agreement also prohibits the transfer of class A voting common stock and class B non-voting common stock unless Voteco determines that the transfer is not being made to a competitor or someone adverse to the company and unless Riviera is satisfied that the transfer will comply with securities and regulatory laws.

In addition, the stockholder agreement conditions the transfers of class B non-voting common stock to specified tag-along rights, drag-along rights and rights of first offer.

According to the 8-K, the reorganized company issued 10 shares of class A voting common stock to Voteco and 8.55 million shares of class B non-voting common stock to Riviera's former creditors.

Governance changes

The company said Paul Harvey, James Land and Vincent DiVito all resigned from its board of directors on the emergence date, as well as from all management positions within the company.

Philip Simons, Tullio Marchionne and Robert Vannucci will remain as employees, with Simons serving as chief financial officer and treasurer on an interim basis, Marchionne serving as secretary and Vannucci serving as a special adviser to the president and chief executive officer of Riviera Operating.

Vannucci will receive an annual base salary of $400,000 and other welfare benefits throughout his 13-month term of employment.

The reorganized company's board of directors consists of Barry S. Sternlicht, Derek J. Stevens, Marcos Alvarado and Andy Choy. Sternlicht will serve as chairman of the board.

Riviera said Sternlicht and Alvarado are employees of Starwood Capital Group Global, LP, and Sternlicht is a Starwood Capital director.

Stevens is an employee and member of Desert Rock Enterprises LLC.

As a result of the transactions completed through Riviera's plan, entities affiliated with Starwood Capital Group Global and Desert Rock Enterprises own roughly 41% and 11%, respectively, of the outstanding class B non-voting common stock and 100% of the outstanding limited liability company interests of Voteco, which in turn owns 100% of the class A voting common stock.

Choy was elected to serve as the reorganized company's president and CEO, and will receive an annual base salary of $450,000.

Riviera owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colo. The company filed for bankruptcy on July 12, 2010. The Chapter 11 case number is 10-22910.

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