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Howard Stutz

Talks between major shareholders in Affinity Gaming may resolve board infighting

28 April 2014

LAS VEGAS -- Talks between the two largest shareholders in casino operator Affinity Gaming may resolve board infighting over control of the Las Vegas-based company that operates 11 properties in four states.

In separate filings with the U.S. Securities and Exchange Commission this week, Connecticut-based hedge fund Silver Point Capital and private equity firm Z Capital Partners of Illinois used similar language to describe reconstituting Affinity’s board. The changes would resolve any litigation filed by Z Capital in the past year.

Z Capital is Affinity’s largest shareholder with a 30.5 percent stake in the company. Silver Point Capital is the second largest shareholder at 24.9 percent. Affinity, which was created in December 2010 following the bankruptcy reorganization of Herbst Gaming, is not publicly traded but has publicly owned debt.

“The tentative understanding will not become final and binding until definitive agreements with respect thereto are executed and delivered by all parties. … and there can be no assurance that such definitive agreements will be so executed and delivered,” both SEC filings stated.

In Nevada, Affinity owns the three Primm resorts, the off-Strip Silver Sevens Hotel & Casino and Rail City Casino in Sparks. The company also owns casinos in Colorado, Iowa and Missouri.

According to the SEC filings, the new Affinity seven-person board would consist of the company’s CEO, two members designated by Z Capital and four members, including two independent directors, designated by Silver Point and other company shareholders.

Richard Parisi, a senior investment professional with Silver Point, is Affinity’s chairman.

Affinity CEO David Ross announced plans in February to leave the casino operator in July. Ross has been CEO since the company was formed and oversaw a restructuring that included sale of several casinos and a slot machine route operation. Affinity acquired three Colorado casinos in a deal with Golden Gaming.

Parisi and another board member are overseeing a search for Ross’s replacement.

Z Capital CEO Jim Zenni questioned the board’s corporate governance practices in 2012 and proposed his own slate of candidates to the company’s board last year.

Zenni made several offers to acquire all of Affinity’s outstanding shares in 2013.