|BEVERLY HILLS, Calif - Oct. 14, 1998--Hilton Hotels Corp.
(NYSE:HLT) and Grand Casinos Inc. (NYSE:GND) Wednesday announced the filing
with the Securities and Exchange Commission of a preliminary joint proxy
statement and prospectus detailing Hilton's proposed separation of its
lodging and gaming operations and the new gaming company's proposed merger
with Grand Casinos' Mississippi operations.
This document had previously been filed confidentially with the SEC.
The transactions are expected to be completed by year-end 1998, subject to shareholder, regulatory and other approvals. Hilton is in the process of obtaining a ruling from the Internal Revenue Service that the distribution of the shares of the new gaming company will not be taxable to Hilton or Hilton shareholders.
Additionally, Grand Casinos will separate its Mississippi business from its Indian casino-management business in a tax-free distribution to its shareholders. The Indian casino-management business, along with various other assets, will form a new publicly traded company.
Grand Casinos is in the process of obtaining a ruling from the IRS that the distribution will not be taxable to Grand Casinos shareholders. It is anticipated that proxy materials will be mailed to shareholders later this month, with each company expected to hold its respective shareholder meeting in late November. The record date for shareholders of both companies has been moved from Oct. 5 to Oct. 20, 1998.
Among the information contained in the filing:
Hilton also announced that upon the split, Matthew J. Hart, executive vice president and chief financial officer for Hilton Hotels, will also assume the responsibilities of treasurer for the lodging company.
New long-term employment agreements, the details of which are contained in the preliminary proxy statement/prospectus, will be entered into with Bollenbach and Goldberg. The agreements, which are primarily stock-option-based and therefore aligned with the interests of the shareholders, include cash compensation (base salary plus bonus), incentive (or "performance") stock options, other standard benefits and noncompete agreements.
Following completion of the transactions, Hilton Hotels will maintain its position as one of the world's foremost lodging companies. The company owns, manages or franchises approximately 260 hotels in the United States, including ownership of some of the world's most renowned properties, such as the Waldorf-Astoria, Hilton San Francisco and Towers, Hilton Hawaiian Village and Chicago's Palmer House Hilton.
Hilton will continue to pursue a growth strategy centered on acquiring full-service hotels in markets seeing little new supply. So far this year, Hilton has purchased approximately $860 million of hotel properties at attractive prices.
The company also will continue aggressively building its franchise program in the United States, Canada and Mexico, which includes the company's successful Hilton Garden Inn program, which is expected to have 200 hotels open or under contract by 2000.
Additionally, Hilton will focus on enhancing the worldwide presence of its brand name through the company's strategic alliance with Hilton International. Pro forma 1997 EBITDA for Hilton's lodging business was $497 million, with pro forma 1998 EBITDA (through June 30) of $295 million.
Park Place Entertainment will be the world's largest (as measured by revenues) and most diverse gaming company. In 1999, the company will have 18 gaming properties with a total of 1.4 million square feet of casino space and more than 23,000 hotel rooms.
Park Place will be the only casino-gaming company with a leading presence in Las Vegas; Atlantic City, N.J.; and Mississippi -- the three largest gaming markets in the United States -- along with casinos in Louisiana, Missouri, Australia, Uruguay and other Nevada markets.
As a leading participant in the rapidly consolidating gaming business, Park Place's growth strategy will focus on strategic acquisitions and new development. As an example of the latter, the company's new $760 million Paris Casino Resort ($400 million expended to date) is scheduled to open in fall 1999 on the Las Vegas Strip adjacent to Bally's Las Vegas.
Through its significant presence in the largest gaming markets, the origination of Park Place's cash flows will be geographically diverse. Pro forma EBITDA for Park Place Entertainment (including Grand Casinos' Mississippi operations) for the 12 months ended June 30, 1998, was $681 million, with debt of $2.2 billion.
This news release contains "forward-looking statements" within the meaning of federal securities law, including statements concerning business strategies and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts. The forward-looking statements in this news release are subject to numerous risks and uncertainties, including the effects of economic conditions; supply and demand changes for hotel rooms; competitive conditions in the lodging and gaming industries; relationships with clients and property owners; the impact of government regulations; and the availability of capital to finance growth, which could cause actual results to differ materially from those expressed in or implied by the statements herein.
||Hilton to Split Gaming, Lodging Operations; New Gaming Company to Merge With Grand Casinos / June 1998|
|Hilton Introduces New Global Corporate Identity / June 1998|