ITT may have provided false information

Gary Thompson

Thursday, Sept. 25, 1997 | 11:32 a.m.

Sealed documents disclose that ITT Corp. executives may have provided Nevada gaming regulators with false information, a Hilton Hotel Corp. official said today.

Hilton Executive Vice President Tom Gallagher urged the Nevada Gaming Commission to consider "highly confidential documents" that "demonstrate that what ITT said before the state Gaming Control Board last week was, in fact, inaccurate."

The documents include depositions, or sworn affidavits, of ITT's executives that have been sealed by U.S. District Judge Philip Pro. Pro will hear arguments from ITT and Hilton lawyers Monday in the momentous legal battle between the two gaming-and-lodging giants.

The revelation of the information allegedly contained in the documents came as the Nevada Gaming Commission heard arguments from both sides over whether to grant or delay approval for a massive restructuring of ITT.

The transaction, developed in response to Hilton's hostile takeover attempt launched last January, would result in ITT breaking into three separate companies without shareholder approval.

Hilton and several large institutional investors contend the breakup is illegal, while ITT argues that it is a prudent and legal business decision.

Hilton lawyer Jack Godfrey urged the commission to delay a decision on ITT's bid for approval, saying, "Not one of you would take final action if you knew ITT's comprehensive plan was illegal ... required shareholder approval ... and that ITT directors were uninformed and had breached their fiduciary duty.

"Within two business days, you will know."

While both sides expect Pro to rule quickly in the high-profile case, Gaming Commission Chairman Bill Curran noted that the loser probably will appeal to the 9th U.S. Circuit Court of Appeals for a temporary stay, which could drag out the regulatory process if Hilton requests another delay pending an ultimate court decision.

But Gallagher indicated that if no emergency stay was granted, ITT would probably proceed with the breakup, ending Hilton's acquisition attempt.

ITT disclosed today that it closed $800 million in debt financing in Europe this morning, including a $525 million Deutschmark financing and a $225 million Eurodollar offering.

It also revealed that its tender offer to repurchase 30 million ITT shares was over-subscribed; 34.8 million shares had been tendered as of today.