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Tuesday, July 28, 1998
Station purchase delayed
Shareholder votes are postponed because of objections to terms in a REIT's takeover bid.
By Adam Steinhauer
Bloomberg
FORTH WORTH, Texas -- Crescent Real Estate Equities Co. and Station Casinos Inc. postponed shareholder votes on Crescent's $1.5 billion purchase of Station, whose preferred shareholders are seeking better terms.
Crescent, the real-estate investment trust controlled by billionaire Richard Rainwater, and Las Vegas-based Station didn't set new dates for the votes, which were to take place Aug. 4.
Station's preferred shareholders, who can hold up the sale until March, were to receive a smaller premium for their shares than common shareholders will receive. Also, they were to be paid in preferred shares of Crescent, which will pay a smaller dividend than Crescent's common shares.
"Crescent's dividend policy with its preferred shareholders hasn't exactly been generous," said John Wagner, managing partner of Camden Asset Management LP. The Los Angeles-based hedge fund owned 334,000 preferred Station shares, or 19 percent of those outstanding, as of March.
Holders of 2.07 million Station preferred shares were to receive preferred shares of Crescent worth $103.5 million. That's a 7 percent premium to those shares' current value. Station preferred shares fell $2.25 to $46.75.
Station's common stockholders, however, are to receive about $505 million in Crescent stock, a premium of about 9 percent to their current price.
Holders of Crescent's common stock will also receive dividends of 66 cents a share, after the purchase closes. Crescent's preferred shareholders have received dividends of 42 cents in the past, and Crescent hasn't said it would increase preferred dividends.
Station shares fell 50 cents to $12.54 in trading of 1.11 million, more than seven times its three-month daily average, on concern that the purchase won't close, analysts said.
The companies couldn't be reached to comment.
"We've been kind of skeptical on this one for some time," said Tom Burnett, owner of research firm Merger Insight. "Clearly, there have been some negotiations behind the scenes."
Station can redeem its preferred stock for $108.6 million, but not until March 15, 1999.
Station is the largest operator in Las Vegas's local market.
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