Riv Acquisition ups offer for Riviera to $34 per share, topping Eichner group's bid by $4

By Lisa Kerner

Charlotte, N.C., May 16 - Riv Acquisition Holdings Inc. increased its bid for Riviera Holdings Corp., offering to acquire the company for $34 per share.

This latest offer is a $4 premium to the May 11 offer from a group led by Ian Bruce Eichner and Dune Capital Management LP, according to a company news release. The Eichner group's bid is an 11% premium over the $27 per share offered by Riv Acquisition and recently rejected by Riviera.

Riv Acquisition's latest proposal includes a 15-day "go shop" period in which Riviera may solicit other proposals. In the event a superior proposal is received, Riv Acquisition is asking for reimbursement of expenses and no additional break-up fee payment.

In addition, Riv Acquisition said it is willing to enter into an agreement similar to the one it had with Riviera on April 5. The investors' necessary equity financing for the deal remains in place.

"We expect the board to allow our group to participate in the auction process on an equal footing with other bidders and no longer raise technical objections to our proposal as it has in the past," Riv Acquisition's proposal letter stated.

"Our investment group believes that time is of the essence and requests that a meeting or a conference call be scheduled as soon as possible with representatives of the board in order to discuss our proposal and set a timetable for swift execution of a merger agreement."

On May 11, Riviera announced it will explore strategic and financial alternatives with the assistance of Jefferies & Co., Inc.

Riv Acquisition includes Paul C. Kanavos and Robert Sillerman, the managing members of New York-based Flag Luxury Properties, LLC; Las Vegas developer Brett Torino and Starwood Capital Group chairman and chief executive officer Barry Sternlicht. The investor group also nominated an opposition slate of nominees for election as directors at the company's annual meeting scheduled for May 15.

On May 3, Riviera said it plans to refinance its $215 million 11% senior secured notes due June 15, 2010 using proceeds from up to $245 million of new credit facilities, according to an 8-K filed with the Securities and Exchange Commission.

Las Vegas-based Riviera owns and operates the Riviera Hotel and Casino in Las Vegas and the Riviera Black Hawk Casino in Black Hawk, Colo.

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