LAWRENCE TOWNSHIP, N.J. — New Jersey gaming regulators Wednesday rejected a proposed $1.1-billion recapitalization plan that Caesars World Inc. used to fend off unwanted suitor Martin T. Sosnoff.
The action by the New Jersey Gaming Control Commission was a serious setback for Caesars' efforts to remain independent.
Without the lucrative recapitalization plan, it was expected that Caesars' stock would plunge Thursday and that the company could again become a takeover target.
Caesars World stock closed Wednesday on the New York Stock Exchange at $35.125 per share, down 12.5 cents.
The commission said the recapitalization plan would seriously hinder the company's financial stability by heavily burdening it with debt.
Commission Chairman Walter Read charged that Caesars' plan "lacks any clear business purpose" and would "greatly enrich and permanently entrench present corporate officials."
Read's arguments were similar to those raised by New York money manager Sosnoff in his aborted bid to take over the company.
Since Caesars is involved in the casino and hotel business in Nevada and New Jersey, it needs the approval of gambling regulators in both states before it can proceed with the plan.