Bally Gaming files suit against Alliance Gaming for misleading disclosure and coercive offer; cites undisclosed involvement of financier Richard Rainwater and many other omissions and misrepresentations.LAS VEGAS--(BUSINESS WIRE)--Sept. 5, 1995--Bally Gaming International Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BGII BGII Baldur's Gate II: Shadows of Amn (computer game) ) today filed suit against Alliance Gaming Alliance Gaming NYSE: AGI is a Las Vegas, Nevada based manufacturer of slot machines and casino management software. History On June 18, 1996 merged with Bally Gaming International. Corp. (NASDAQ:ALLY) charging that in its conditional partial tender offer for 4.4 million Bally Gaming shares, Alliance has deliberately provided misleading information to BGII shareholders, gaming regulators and the markets, creating a coercive tender offer, and in the process has violated numerous securities laws. The suit, filed in Federal Court in Delaware, maintains that Alliance nowhere discloses that the power and money behind the Kirkland Investment Corp.'s (KIC KIC Kuwait Investment Company KIC Keep in Contact (alumni programme of Deutsche Post World Net) KIC Ketchikan Indian Community (Ketchikan, Alaska) KIC Keep It Coming ) controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail in Alliance is financier Richard Rainwater, who is part owner of the Texas Rangers baseball team. KIC's principal business is acting as the general partner of Kirkland-Ft. Worth Investment Partners L.P. (KFW KFW Kreditanstalt Für Wiederaufbau (German Development Bank) ), a limited partnership in which the suit charges Rainwater is a direct or indirect partner. The suit charges that Alliance has previously concealed from gaming regulators in various states that Rainwater is an active principal behind Alliance's controlling shareholder (KIC), and has instead falsely represented that he is a passive investor with no intention of having any active role in management decisions. The Nevada Gaming Commission The Nevada Gaming Commission is a Nevada state governmental agency involved in the regulation of casinos throughout the state, along with the Nevada Gaming Control Board. It was founded in 1959 by the Nevada Legislature. ordered Rainwater to have no involvement in the running of Alliance without prior approval. The suit further charges that the disclosure of Rainwater's active role to regulators will cause substantial delays in any approval process and, similarly, the unstable financial condition of a combined Bally Gaming/Alliance will cause delay in the regulatory process and possibly ultimate rejection. The suit cites published reports that Rainwater and KFW control Alliance. It charges that Rainwater's role at Alliance has been touted to Wall Street professionals, although statements in Alliance tender offer documents are intentionally designed to conceal Rainwater's involvement in Alliance because Major League Baseball "MLB" and "Major Leagues" redirect here. For other uses, see MLB (disambiguation) and Major Leagues (disambiguation). Major League Baseball (MLB) is the highest level of play in North American professional baseball. prohibits baseball owners from having any interest in a gambling enterprise. The suit maintains that in 1994, Rainwater professed that his interest in Alliance, (then known as United Gaming) was "passive and small." However, in November 1993, Institutional Investor Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. quoted Rainwater as saying that he sees gambling as "one of the most interesting long-term businesses," and was planning to "build up United (Gaming), add to its capital in return for equity," and "become a really large factor in this industry." The suit maintains that Rainwater has also told Bally Gaming that he is personally involved in the Alliance approaches to Bally Gaming. Rainwater was present at a Bally Gaming board meeting in the Spring of 1995 at which Alliance made an acquisition proposal. Rainwater has also told Bally Gaming that Alliance cannot consummate a hostile takeover Hostile Takeover A takeover attempt that is strongly resisted by the target firm. Notes: Hostile takeovers are usually bad news, as the employee moral of the target firm can quickly turn to animosity against the acquiring firm. of Bally Gaming. The complaint contrasts these statements and actions with the representations made by Alliance to the Nevada Gaming Commission that Rainwater would have no active participation in Alliance's business or operations. In light of these and other facts, the suit argues that BGII shareholders are entitled to know whether the principal behind Alliance's controlling shareholder is an active or passive investor, and what his role is in the offer. The suit also alleges, among other things, that: o Alliance is severely underfunded un·der·fund tr.v. un·der·fund·ed, un·der·fund·ing, un·der·funds To provide insufficient funding for. underfunded adj → infradotado (económicamente) and overleveraged, such that it will be unable, if it acquires control of Bally Gaming, to cause Bally Gaming to repay $40 million of debt that will immediately come due. This acceleration of maturity will prevent Alliance from drawing down the loans it requires to complete its tender offer. Alliance will also be unable to issue stock of real value in a back-end merger or to go forward as a viable company. o Alliance's so-called tender offer is not designed to enable Alliance to acquire all shares of Bally Gaming at the same price, but is instead a vehicle to permit Alliance to interfere with and disrupt the merger agreement that has been entered into between Bally Gaming and WMS WMS Warehouse Management System WMS Web Map Service (open geospatial consortium specification) WMS West Middle School (Rochester Hills, MI) WMS Workforce Management Software WMS Wechsler Memory Scale Industries Inc. (NYSE NYSE See: New York Stock Exchange :WMS). Uncertainties concerning the back-end merger will have the effect of coercing shareholders into tendering their stock to Alliance even if they would prefer the merger with WMS. If sufficient Bally Gaming stock is tendered to Alliance to permit it to replace the directors of Bally Gaming with its own designees, these designees will then "negotiate" a merger agreement on Alliance's terms. o The centerpiece of Alliance's on-again, off-again consent contest is the false appearance that Alliance has made a desirable offer for Bally Gaming that Bally Gaming's directors have improperly rejected, and as a result, Alliance must conceal the fact that it has received extraordinary cooperation from Bally Gaming's board. The suit also argues that Alliance's 14D-1/"Proxy Statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. " has knowingly been crafted so as to be replete with misrepresentations and omissions, on the subjects of: o The interests behind Alliance. o The financing for its conditional partial tender offer. o The financial condition of a combined Alliance/Bally Gaming entity. o Alliance's plans for Bally Gaming, including the likelihood of a proxy contest Proxy contest A battle for the control of a firm in which a dissident group seeks, from the firm's other shareholders, the right to vote those shareholders' shares in favor of the dissident group's slate of directors. Also called proxy fights. and terms of any future merger between Alliance and Bally Gaming. o The history of Alliance's negotiations with Bally Gaming, including the opportunities afforded to Alliance to conduct due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. of Bally Gaming. o The obstacles to a rapid Alliance/Bally Gaming combination, including the regulatory approvals and a non-competition agreement to which Bally is a party. o The proposed WMS merger. In seeking relief, the suit argues that if Alliance is not "preliminarily and permanently enjoined from violating the law, and from proceeding with its offer without making corrective disclosures, Bally (Gaming) and its shareholders will suffer irreparable injury Any harm or loss that is not easily repaired, restored, or compensated by monetary damages. A serious wrong, generally of a repeated and continuing nature, that has an equitable remedy of injunctive relief. in that shareholders will be forced to make investment decisions concerning their Bally (Gaming) stock without full and adequate information." On Aug. 8, 1995, the Board of Bally Gaming restated its belief that the previously announced merger with WMS Industries Inc. is in the best interest of Bally Gaming shareholders. Under the definitive agreement signed on June 21, 1995, each share of BGII common stock will be converted into .55 of a share of WMS Common Stock, resulting in a current non-taxable value to BGII shareholders of $12.51 per share, based on the closing price of WMS shares on Sept. 1, 1995. Under the WMS merger, shareholders would also receive incremental value from the sale of Bally Gaming's German operations, Bally Wulff. Bally Gaming expects shareholders to receive a cash payment of at least 45 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , based on the anticipated sale of Bally Wulff for at least $60 million. An investor group has indicated interest in purchasing Bally Wulff for $60 million in cash, net to Bally Gaming. Bally Gaming is negotiating with this investor group but it is also seeking additional buyers. Bally Gaming International Inc. through its subsidiaries, is a world leader in the manufacture of gaming and computer-tracking devices for casinos. The company designs, manufactures and distributes its gaming and computer systems through its Bally Gaming Inc. subsidiaries in Las Vegas and Reno, Nev. and its Bally Wulff subsidiaries in Berlin and Hannover, Germany. CONTACT: Bally Gaming International Inc. Neil E. Jenkins, 312/992-1144 or Sard Verbinnen & Co., New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of George Sard or Anna Cordasco, 212/687-8080 |
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