Nugget Sues Hilton to Get Greater Disclosure

Golden Nugget opened a court battle Friday to force Hilton Hotels to inform its stockholders properly about the purpose of anti-takeover proposals set for a vote at its May 6 annual meeting, as well as about its trouble with New Jersey casino regulators.

A suit filed in U.S. District Court here accused Hilton Chairman Barron Hilton, the firm’s other directors and the executor of the estate of company founder Conrad Hilton of violating federal securities laws by failing to make adequate disclosure in a proxy statement for the meeting.

Las Vegas gambling hall operator Golden Nugget owns about 4% of Hilton’s stock and has been seeking for two weeks to buy for $488 million another 27.4% held by the Conrad Hilton estate. Golden Nugget has said it may make an offer for all Hilton stock held by its public shareholders as well.

The suit said management’s proxy statement is false and misleading because it fails to disclose adequately the purpose and effect of the anti-takeover measures.

Also, it complained of lack of disclosure of “certain information concerning the recent ruling of the New Jersey Casino Control Commission with respect to Hilton and its management.”

In elaboration, the suit said New Jersey authorities have raised “serious questions . . . about the integrity” of Barron Hilton and certain others in management. It added that these included statements that they “failed to demonstrate the good character, honesty and integrity required” for a casino license in that state.

Golden Nugget’s suit asks the court to enjoin further solicitation of proxies by Hilton and to invalidate proxies previously granted.

The latter provision would apply to the proxy for the 27.4% block given by Conrad Hilton estate executor James E. Bates to Barron Hilton. The suit alleges that the proxy was unlawfully solicited.

Bates, who also is a Hilton director, thus far has declined to accept Golden Nugget’s offer for the 27.4%, which is the subject of a probate court dispute between the Conrad Hilton Foundation, a charitable trust, and Barron Hilton, the founder’s son.

A spokesman for Hilton Hotels said it had no comment on Friday’s suit.