S&P puts Riviera on developing watch

Standard & Poor's said it placed Riviera Holdings Corp.'s B corporate credit and senior secured debt ratings on CreditWatch with developing implications.

The CreditWatch listing follows the filing of a Schedule 13D by an investor group, which outlined a stock purchase agreement whereby the group had agreed to acquire a 17% ownership stake in Riviera Holdings through a series of transactions over the next several months, subject to various approvals and conditions. The chairman and chief executive officer and an affiliated trust currently hold this ownership stake, the agency said.

The investor group includes Flag Luxury Riv LLC, Rivacq LLC, High Desert Gaming LLC and various affiliated entities.

In addition, the filing outlined a joint bidding agreement by which the group intends to enter into negotiations with the Riviera board of directors about a potential acquisition of the company.

These agreements follow the announcement by the company on Nov. 8 that it had concluded its process of exploring strategic alternatives in an effort to enhance shareholder value. While the potential acquisition of the company by the investor group remains uncertain, the stock purchase agreement entered into with the chairman and CEO expires within six months if an acquisition transaction does not occur, S&P said.

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