Nevada regulators give initial OK to Hilton split

Thursday, Dec. 10, 1998 | 11:43 a.m.

CARSON CITY -- The plan by Hilton Hotel Corp. to split its gaming and lodging businesses gained preliminary approval from the state Gaming Control Board Wednesday.

The new gaming company will be called Park Place Entertainment Corp. and have 18 casinos in Nevada, Australia, Mississippi, Uruguay, Missouri, Louisiana and Atlantic City.

Jack Godfrey, Las Vegas attorney representing Park Place, said the spin-off would permit "the expansion of gaming" in the new casino company. Under the new arrangement, present casinos will be permitted to continue use of the Hilton name under a 10-year agreement.

Park Place will be the world's largest casino company with an estimated $2.7 billion in annual revenues. Included in the holdings will be the Paris hotel-casino, expected to open in September in Las Vegas.

Stephen F. Bollenbach will be chairman of the board and Arthur M. Goldberg will be director, president and chief executive officer in Park Place. Bollenbach runs Hilton now while Goldberg is its top casino boss.

The transaction is expected to be completed by the end of the year, pending receipt of a favorable tax ruling from the Internal Revenue Service.

Shareholders have already approved the reshuffling.

Regulators in New Jersey have approved the split. And Australia, Uruguay and Mississippi are expected to follow this month. There is no definite date for Louisiana or Missouri to act.

Scott LaPorta, executive vice president in Park Place, said it has commitments for $2.2 billion of the target $2.5 billion it is seeking to raise. It will use $1.6 billion to pay off debts of the old corporation.

The debt between the hotel and the casino companies was split 50-50.

The money from the financing would also retire $555 million in loans owed by Grand Casino Corp., whose casinos in Gulfport, Biloxi and Tunica in Mississippi are being acquired by Park Place.

Stockholders in Grand Casinos would end up with about 13.6 percent of Park Place and the Hilton shareholders would have the remaining 86.4 percent.

Gaming Board member Dennis Neilander said, "This looks like a healthy merger."

Not included in the acquisition of Grand Casinos are its Indian management contracts and about 10 undeveloped acres near the Polo Tower in Las Vegas. Grand Casinos is spinning off those assets into Lakes Gaming Corp.

The Nevada Gaming Commission meets Dec. 17 in Carson City to give final approval to the deal.