One Step Ahead

[joye1]

Bo...SPEA news

By ETHAN SMITH
Staff Reporter of THE WALL STREET JOURNAL
December 28, 2004; Page C1

Even Elvis Presley's 1977 death didn't end his career. The company that will now merchandise his legacy -- created from a so-called reverse merger -- is a lesson in how the fortunes of a stock traded on the wild and woolly OTC Bulletin Board can change in a flash.

Earlier this month, the stock of Sports Entertainment Enterprises Inc., rocketed from 10 cents a share to a brief high of more than $11, before settling into the $7-$8 range -- remarkable for a company that hasn't had active operations since 2002. Such dramatic moves -- up and down -- aren't uncommon in the highly risky, rock-and-roll world of the Bulletin Board, an over-the-counter market for companies that don't meet the standards of better-known markets like the Nasdaq Stock Market and the New York Stock Exchange.

The stock got all shook up following the announcement by billionaire Robert F.X. Sillerman that as part of his $75 million deal to take control of Elvis Presley's estate, Mr. Sillerman's RFX Acquisition LLC will buy 94% of Sports Entertainment's common stock, with the option to buy another 2%. Mr. Sillerman will then change the name of Sports Entertainment to CKX Inc. The newly named company will own and administer 85% of Elvis Presley Enterprises Inc., which had $44.9 million in revenue last year. That business will license the singer's name and likeness, among other operations. Mr. Presley has ranked No. 1 on Forbes magazine's list of top-earning dead celebrities for four years running.

Such transactions, known as reverse mergers, are seen as the fastest way to take a private company public without the lengthy underwriting process of an initial public offering. The level of regulatory disclosure for a reverse merger is identical to that required for a standard IPO of stock, according to Tim Halter, president of Halter Financial Group Inc., of Dallas, who advises companies on reverse mergers.

Mr. Halter says reverse mergers are relatively common, although they tend to be lower profile than IPOs, partly because they don't involve a splashy sales roadshow and don't generate an instant infusion of cash from the public market.

But for a deep-pocketed company like Mr. Sillerman's those aren't likely to be concerns. And by creating public shares, the reverse merger provides ready currency for acquisitions, which Mr. Sillerman has said he plans to make.

Sports Entertainment had languished as a penny stock since its biggest venture, a sports-themed amusement park near the Las Vegas strip called All-American SportPark, went belly-up in 2001 after a few years in business. It was "delisted" by Nasdaq that same year for failing to maintain a minimum stock price.

Sixty-five percent of Sports Entertainment is owned by various insiders listed as officers of the dormant company, most of them members of the family of its founder, Vaso Boreta, who started the company in 1974 under the name Las Vegas Discount Golf & Tennis Inc. Another 31% is owned by an investment group that includes Andre Agassi, the tennis star.

Sports Entertainment owned roughly 66% of the theme park, which featured a Nascar-themed go-kart track and Major League Baseball-themed batting cages. All-American SportPark remains in business as the parent of four golf-retail shops and a golf-practice facility, all in Las Vegas. Sports Entertainment sold its interest in this reduced version of All-American in 2002.

So while Elvis has left the building, and Sports Entertainment hasn't effectively been in business for a couple of years, the two may make a great team.

Ronald S. Boreta, the 42-year-old chief executive of both Sports Entertainment and All-American SportPark and a son of Vaso Boreta, says he entertained 30 to 40 proposals from businesses looking for a publicly traded shell company before settling on Mr. Sillerman's offer. The proposals, Mr. Boreta says, "ran the gamut," from online dating services to gourmet-coffee companies.

Mr. Boreta says he was introduced to Mr. Sillerman by Jack Schneider, an investment banker at Allen & Co. who is a mutual friend of the two men. Mr. Boreta was in talks concerning the current deal with Mr. Sillerman and his representatives for "about eight months." He and a representative for Mr. Sillerman say Mr. Schneider isn't involved in the transaction with Mr. Sillerman.

For investors bidding up the roughly 4% of Sports Entertainment shares that are publicly traded, the frenzy is an attempt get a piece of the Elvis Presley estate. None of the 96% of the shares Mr. Sillerman plans to acquire will be bought on the open market.

Mr. Sillerman's offer will pay the Boretas, Mr. Agassi's group and the other company insiders from 10 cents to $2 a share for their 3.25 million shares, which will be converted into one million shares of the new company, CKX. Mr. Boreta said his family will retain a small ownership stake in the new entity.

Although the deal's terms have been agreed on, it hasn't been completed. It will take between 45 days and four months to close, say people involved in the transaction, subject to certain conditions. Meantime, shares in Sports Entertainment Enterprises are likely to see more action than they have in years.

http://ragingbull.lycos.com/mboard/boards.cgi?board=CLB01219&read=136791