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CEO's offer to buy strip-club company VCG 'inadequate,' board panel says

A special board committee evaluating an offer by the CEO of Colorado adult-nightclub operator VCG Holding Corp. to buy the company has deemed the offer "currently inadequate," VCG announced Wednesday.

Last month, CEO Troy Lowrie, through an investment entity called Lowrie Management LLLP, and "certain other unidentified investors," offered to acquire all outstanding stock in Lakewood-based VCG (NASDAQ: VCGH), which operates Denver's Diamond Cabaret and La Boheme as well as several other clubs nationwide.

Lowrie's group offered $2.10 a share, and he planned to take the company private, VCG announced Nov. 4.

The company's board formed a special committee of independent directors George Sawicki, Kenton Sieckman and Carolyn Romero to evaluate Lowrie's proposal and advise the rest of the board.

"The special committee has informed Lowrie that it has determined, with input from its advisors, that the terms of the proposal are currently inadequate," the company statement said. "In addition, the special committee has directed its financial advisors, North Point Advisors LLC, to contact any parties that had either previously expressed an interest or might potentially be interested in pursuing a transaction with the company."

The statement added that "no final decisions have been made by the special committee with respect to the [Lowrie] proposal." It said the committee intends to continue negotiations with Lowrie.

VCG stock opened at $2.12 a share Wednesday and has been trading in the range of $1.24-$2.79 over the last 52 weeks.

Lowrie Management already is VCG's biggest single shareholder, owning 33 percent of its stock as of Dec. 7, according to Thomson Reuters. There are about 17 million shares of VCG stock outstanding.

Lowrie has been CEO and chairman of VCG since 2002. Last December, he signed a five-year employment agreement with the company, setting his base salary at $700,000 a year; he had not previously drawn a salary from the company.

In Colorado, VCG also operates the Penthouse Club in Glendale as well as two PT's clubs in Denver and one in Colorado Springs. And it runs clubs in Anaheim, Calif.; Indianapolis; St. Louis; Fort Worth; Dallas; Raleigh, N.C.; Minneapolis; Louisville, Ky.; and Portland, Maine.

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Wednesday, December 16, 2009

http://denver.bizjournals.com/denver/sto…