A special committee of Resorts International directors agreed Monday to accept a sweetened buyout offer from controlling shareholder Donald Trump. The flamboyant New York developer, who had raised his offer to $22 a share from $15, said he is now prepared to provide funding to finish the firm's massive Taj Mahal hotel-casino in Atlantic City, N.J.
Trump had sharply curtailed construction in late December of what an analyst called "the most expensive hotel in the world." Raising questions about its fate, Trump had said he would not commit his own fortune to finishing the project unless he could take the company private.
The developer's estimate of the price tag for the Taj Mahal is $930 million, compared to a $750-million estimate last July by the pre-Trump management of Resorts International. The funds still needed to be raised were last estimated at $550 million.
Asked about the effects of Monday's announced agreements, Trump said in a telephone interview: "Now we can proceed. The previous management started to build an incredible building, but they didn't know how to build. I'm in the process of straightening out the cost overruns.
"Now that I own 100%--or soon will own 100%--I have no problem. I look forward to completing it. Now Resorts doesn't have to put up 'junk bond' money" to finish the project, he said.
The company said Monday that a special committee of its board had agreed to recommend acceptance of Trump's revised merger offer after having rejected the $15-a-share offer on Jan. 12 as "grossly inadequate." The company also announced that Trump has reached tentative agreement to settle a number of shareholder suits.
First Offer Too Low
The 5.7 million Class A shares of Resorts International have been on a roller-coaster ride in recent months. After trading as high as $66 a share on the American Stock Exchange, the stock fell to $12.375 shortly after Trump made his $15-a-share offer in December. Some institutional investors were sharply critical of the first offer, saying it was too low.
Class A shares closed Monday at $20.25, up 62.5 cents, after rising $3.875 last Friday.
Trump, who already owns two casinos in Atlantic City, succeeded in acquiring control of Resorts last July by paying $135 a share for 585,000 of the 752,230 shares of Class B stock, which carry 100 times the voting weight of Class A shares.
He controls 88% of the combined voting power of both classes, the company said Monday.
Although Trump paid $135 a share in a tender offer last fall for additional Class B shares, the agreement announced Monday also calls for payment of $22 a share for those Class B shares still owned by public investors.
The Resorts announcement said the agreement is subject to negotiation, approval and execution of a definitive merger agreement, which the company expects "early this week."
Completion of the tender offer and merger are conditioned on regulatory approvals, including those involving New Jersey licensing for the Taj Mahal, and upon completion of the lawsuit settlements.
The company said the merger agreement would be terminated in 75 days if approvals and consents relating to the Taj Mahal are not obtained.