Casino Regulators Reject Stockholder Arguments
LAWRENCE TOWNSHIP, N.J. (AP) _ Two stockholders of Resorts International Inc. will have to go to civil court to try to block Donald Trump from getting more than $60 million from his deal to sell the company, following the rejection of their claims by the Casino Control Commission.
The panel said Thursday that the stockholders should take their objections to a civil court. Julien J. Studley Inc. and Joseph Gutstein had argued that Trump is not entitled to any payment for severing his services agreement.
In May, Trump reached an agreement to sell his interest in Resorts to entertainer Merv Griffin in a deal which will take the company private and give Trump the unfinished Taj Mahal casino hotel.
Griffin has agreed to buy Trump’s controlling Class B stock in the company for $96.2 million and to pay Trump approximately $63 million to sever a services agreement. The services agreement was based on revenues, pre-tax income and the construction cost of the Taj Mahal.
In return, Trump agreed to buy the Taj Mahal for approximately $255 million.
The stockholders argued that Trump is not entitled to any payment for severing his services agreement with Resorts, and the agreement is void.
Alan Bandler, a lawyer for the stockholders, has said Trump bought control of the company a year ago and is now making a $63 million profit from the termination of the management agreement, as well as getting the Taj Mahal at a lucrative price.
In the interim, Bandler has charged, the stockholders have lost $135 million and he cited the decline in market value of Resorts Class A stock.
The commission also ruled it would not consider the financing of the Trump- Griffin deal until Griffin receives interim casino authorization, for which he has applied.
Under New Jersey law, interim casino authorization allows an unlicensed company or individual to hold an interest in, or control of, a casino company without first going through the extensive licensing process.