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29 July 2014
By Howard Stutz
LAS VEGAS -- Casino operator Affinity Gaming will restructure the Las Vegas-based company’s board of directors and has resolved any default issues surrounding its debt.
In a statement Monday, Affinity — which operates 11 casinos in four states including the off-Strip Silver Sevens Hotel & Casino and the three Primm resorts — said the company reached agreement with its lenders over a possible default on a portion of its $382.7 million in long-term debt.
Affinity said it received “full support” of its lenders in fixing the company’s credit agreements.
Meanwhile, Affinity said the changes to the board would resolve a lawsuit brought against the company by its largest shareholder, Z Capital Partners of Illinois.
Under the terms of the agreement, Affinity’s board will have seven directors: two appointed by Z Capital, four directors, including two independent directors, designated by shareholder Silver Point Capital and other shareholders, and the company’s CEO.
Affinity is seeking a new CEO after David Ross announced earlier this year he would leave the position at the end of this month.
Z Capital CEO James Zenni said settlement with the board’s lenders and bondholders “underscores the company’s ongoing positive development.”
The agreement ended Z Capital’s dispute with the company and its previous board concerning corporate governance. Z Capital was also seeking direct involvement in setting Affinity’s strategic direction.
Z Capital owns 33.7 percent of Affinity and Silver Point, which is located in Connecticut, owns 25.1 percent of the company. Affinity has publicly traded debt.
“We believe this mutually agreeable decision is in the best interests of Affinity and all stakeholders, as the company’s two largest shareholders are now actively involved with the board,” Zenni said.
Affinity has casinos in Nevada, Colorado, Missouri and Iowa. The company revealed its debt issues in a filing with the Securities and Exchange Commission earlier this month.
The SEC filing caused Moody’s Investor Services to give Affinity a negative rating outlook on the company’s debt. In a statement, Moody’s gaming analyst Keith Foley said the downgrade reflected Affinity’s “steady decline in earnings and corresponding rise in leverage.”
Analysts said Affinity has seen property-level earnings declines in its operating segments.
Affinity Chairman Rich Parisi, who is a senior analyst for Silver Point, said the new agreement with the company’s lenders strengthened the company’s financial position.
“The resolution of the litigation and the increased direct involvement of the company’s largest shareholders will allow Affinity to focus on growth and value creation,” Parisi said.
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