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Howard Stutz

Full House Resorts calls proxy fight "disruptive"

14 October 2014

LAS VEGAS -- Casino operator Full House Resorts, Inc. said Monday that it has been “evaluating strategic alternatives for several months” and called a proxy fight by a group of shareholders “inappropriate and disruptive.”

The Las Vegas-based company said in a statement it was exploring options, such as “potential merger or sale of the company.”

The statement followed a proxy solicitation filed last week with the Securities and Exchange Commission by a group of Full House shareholders. The group is led by former Pinnacle Entertainment, Inc. CEO Dan Lee and is seeking a special stockholders meeting to remake the company’s board of directors.

Full House owns three casinos: one in Indiana, one in Mississippi and the Stockman’s Casino in Fallon. The company also manages the Grand Lodge Casino at Hyatt Regency Lake Tahoe under a lease agreement. In September, the company’s management contract for an Indian casino in New Mexico ended.

Full House said it would “inform its stockholders of the result of its review of strategic alternatives at the appropriate time” and asked its shareholders to not take any actions on the proxy filing.

“The company also notes that many of the statements made by the dissident group are inaccurate or misleading,” the statement said.

The stockholder group owns 6.2 percent of the company’s outstanding shares and wants to elect five new members to the company’s board. The company has a market capitalization of $24.9 million.

Lee said Full House “has failed stockholders” and went on “a reckless buying binge, overpaying for three shrinking casinos and pursuing two hotel additions that have marginal returns.”

Lee is a gaming industry veteran who also served as chief financial officer of Steve Wynn’s Mirage Resorts Ltd.

The five shareholders include former Boyd Gaming Corporation Chief Financial Officer Ellis Landau, who is president of the holding company that owns the Aliante Casino Hotel and Spa in North Las Vegas.

In a letter to Full House shareholders, the group said the company’s shares, which are traded on Nasdaq, fell almost 59 percent from September 2013 to last month.

The group criticized a failed attempt by Full House to buy a Tunica, Miss., casino this year in which the company lost more than 97 percent of $1.75 million escrow account and spent $300,000 in professional fees associated with the transaction.

In a series of talking points posted on the company’s website, Full House said it has proactively addressed economic pressure by reducing costs at both its property and the corporate level. Full House said it withdrew its purchase of the Tunica casino because of declines in the Mississippi gaming market.

“The company will pursue the strategy that is in the best interest of all stockholders, and encourages its stockholders not to support actions that enable the dissident group to take control of the company without providing a fully formed strategic plan to create value for stockholders of the company,” Full House said in a statement.

Lee’s group needs SEC approval to approach Full House stockholders. The proxy fight will need 40 percent approval from shareholders to schedule a vote.

Full House shares rose 2 cents, or 1.54 percent, Monday to close at $1.32 on Nasdaq.
Full House Resorts calls proxy fight "disruptive" is republished from