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Best of Howard Stutz

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Howard Stutz
 

Private equity firm offers to buy remaining stake in Affinity Gaming

6 April 2015

Illinois private equity firm Z Capital Partners, which already owns 39.5 percent of Affinity Gaming, has offered to buy the rest of the Las Vegas-based casino company for $9.75 per share.

In letter to the company board Friday, Z Capital CEO James Zenni — who is also a member of Affinity’s board — said a single ownership makes the most sense for the company, which owns 11 casinos in four states, including the three Primm properties and the off-Strip Silver Sevens.

Z Capital has more than 8 million shares in the company. Under the proposal, Z Capital would self-finance the transaction through the company’s funds and debt financing. A company source said the offer implies an enterprise value of $487 million.

“Given Affinity’s size and configuration, and the challenges it face, we believe that it needs a single owner with resources and committed capital, and a willingness to put them to work, necessary to make the company grow,” Zenni wrote.

Zenni made a similar offer to buy all of Affinity two years ago. He said Friday the stock offer was 9.7 times the company 2014 cash flow.

Zenni joined the company’s board last year after a lengthy legal skirmish with the previous board. Richard Parisi, a senior analyst for Silver Point Capital, was named chairman. Silver Point is Affinity’s second-largest shareholder with 25.1 percent.

Last summer, former Caesars Entertainment executive Michael Silberling was named the company’s CEO.

In a filing with the Securities and Exchange Commission, Z Capital said the letter was “intended to serve solely as an indication of interest and does not constitute a binding offer.”

Affinity Gaming was created out of the re-configured Herbst Gaming, which emerged from bankruptcy in December 2010. The company is not publicly traded, but has $382 million of publicly held debt.

Zenni said the current ownership configuration was “unproductive” and does not allow Affinity to pursue various growth and “transformational” initiatives.