Merv Griffin Becomes New Owner of Resorts International
ATLANTIC CITY, N.J. (AP) _ Entertainer Merv Griffin became the new owner of Resorts International Inc. on Tuesday, taking control from developer Donald Trump after months of haggling with financiers and gaming regulators.
Griffin paid $96 million for Trump’s controlling block of Class B shares, or $135 a share. He paid another $201 million for the less powerful Class A shares, or $36 a share.
The transaction will be completed Wednesday when Griffin pays Trump $63 million to terminate his management contract with Resorts.
″Sixty-three million for six months’ work - that’s not bad,″ Trump said.
Griffin on Wednesday also will sell Resorts’ unfinished Taj Mahal casino project to Trump for about $273 million.
″That’s $300 million less than Resorts already has put into it, so as you can see, I’m very happy,″ Trump said.
Griffin said after Tuesday’s closing in New York that ″it’s been a long, exhausting process.″
″In April, we felt it was a completed deal, but there were so many assets involved,″ he said. ″It’s not just buying a hotel, it’s buying an island, a surveillance company, real estate, aircraft - it has so many pieces that it was almost impossible to put it together.
″It all came together today, though, in a stack of paper about 100 feet high.″
Asked what advice he has for Griffin, Trump said, ″He has to work hard. It’s going to be a very tough deal. He’s got the problem of the Taj’s debt and he’s taking over a facility that’s 60 years old.″
″He will have to invest millions in it,″ Trump said. ″He also is taking over the place in the Bahamas that has a brand-new casino opening next to it. More millions will have to be spent to bring it up to date.″
″It looks like he could lose $50 million a year in this transaction,″ Trump said.
Under terms of the deal, Griffin will make $25 million in improvements to Resorts’ Atlantic City casino and another $25 million to the Bahamas operation.
Griffin said he believed both parties ″came out even″ in the deal. He acknowledged that the Resorts’ facilities are old, ″but they are also charming.″
″I purchased the most famous house in Atlantic City,″ he said. Having the massive Taj Mahal open next door ″only benefits us - it will bring a lot of people.″
Griffin said his first plan of action will be to start capital improvements on the properties ″so that when the Taj opens and people taste this end of the Boardwalk, Donald will be content with my spillover.″
Griffin, a former big band singer and talk show host, has developed a number of television game shows, including ″Wheel of Fortune″ and ″Jeopardy.″
He financed the Resorts deal through a $325 million bond offering and will contribute $50 million in equity into Resorts. One of the conditions that Griffin wanted met before securing the deal - a $200 million tax break - was granted by the Internal Revenue Service.
Trump said he raised $675 million to complete the 1,250-room Taj Mahal. Construction will begin again immediately, and the doors should open in about 15 months, he said.
Also Tuesday, Resorts International released its third-quarter results, showing a $339.8 million net loss, the bulk of which comes from the sale of the Taj Mahal and the cost of breaking the management contract. That is compared to a net loss of almost $7 million in the same quarter in 1987.
Revenue for the third quarter totaled $123.9 million, compared to $118 million for the same quarter last year.
The net loss for the first three quarters of 1988 was $357.4 million, compared to net earnings of $5.9 million for the first three quarters of 1987.
Nine-month revenue rose to $353.5 million, up from $348 million a year earlier.
Griffin has hired David P. Hanlon, president of Harrah’s Marina Hotel and Casino, to run Resorts International’s Atlantic City gaming hall.
The numerous parcels of property that Resorts owns in Atlantic City will be sold ″little by little,″ Griffin said.
″It shouldn’t be coveted - it should be out there, made available to people. There’s a nice 15-acre zoned parcel on the other side of Showboat that would make a very nice spot for someone.″