Caesars Holders OK Recapitalization
Jul. 08, 1987
LOS ANGELES (AP) _ Hotel-casino operator Caesars World Inc., no longer threatened by a hostile takeover bid, said Wednesday its shareholders approved its $942.4 million recapitalization plan.
The plan, under which each share of stock receives a special $26.25 dividend, was approved by 79 percent of the 22.1 million shares voted.
The recapitalization and special dividend still are subject to regulatory approvals by gaming officials in Nevada and New Jersey.
The Nevada Gaming Control Board already has reviewed the plan and recommended that the state's Gaming Commission approve it when it meets July 16.
New Jersey officials won't take up the issue until next week, with a decision not expected before the end of the month.
Besides its hotel-casinos in Nevada and New Jersey, Caesars operates resorts in the Poconos Mountains of Pennsylvania.
Caesars put forth the recapitalization plan in a successful effort to ward off an unwanted takeover bid by New York investor Martin Sosnoff.
As opposed to Sosnoff's buy-out, the recapitalization would allow shareholders to retain their stock, which has been trading on when-issued basis at $8.375 per share, giving the company's plan a total value of $34.625 per share.
Sosnoff dropped out of the bidding in mid-June after a federal judge in Los Angeles forbade him from proceeding with his offer on grounds that $975 million of the $1 billion he would have to raise would would be secured by Caesars' stock.
A Federal Reserve Board rule says no more than 50 percent of the purchase price of stock can be borrowed if that stock is to be pledged as security to a lender.
Sosnoff's last offer for the company was $35 per share, but only for 26.5 million shares. That would have raised his 11 percent stake in the company to 85.6 percent.
He pledged to buy the remainder of the company's stock for a package of securities. He put no price tag on those securities, but analysts said they would be be worth somewhat less than $35 per share.