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Howard Stutz

Z Capital Partners now largest shareholder in Affinity Gaming

10 July 2012

Illinois-based Z Capital Partners, which has slowly increased its ownership in Affinity Gaming over the past year, is now the largest shareholder in the Las Vegas-based company, which operates nine Nevada casinos, including the three Primm resorts and the off-Strip Terrible's.

The private equity group said in a statement it owns almost 25 percent of Affinity Gaming, which was formed in December 2010 from the remnants of the bankrupt Herbst Gaming. At the time, Silver Point Capital, a Greenwich, Conn.-based hedge fund, had been Affinity's largest shareholder with almost 19 percent of the company.

"We have great respect for Affinity Gaming and its strong commitment to guests, employees and partners," Z Capital Chief Executive Officer James Zenni said in a statement. "This investment has been a two year process and we see significant potential for long-term growth at Affinity Gaming and look forward to supporting management's efforts to lead the company into its next phase."

In addition to its Nevada holdings, Affinity operates casinos in Iowa and Missouri. The company is awaiting regulatory approval in Colorado to take over three casinos the company acquired in a transaction with Golden Gaming.

Z Capital, which had just less than 20 percent of Affinity in November, said its stake is now 24.97 percent, which is just under the threshold set by Nevada gaming regulations that would trigger automatic licensing for an institutional investor.

The Gaming Control Board can require Z Capital to be licensed if the company is deemed to be going beyond being a passive investor and seeking to exert control over the operation, such as influence management or nominate members to the board of directors.

Z Capital has been approved by Iowa and Missouri gaming regulators and is awaiting approval in Colorado.

In a statement, Affinity Gaming CEO David Ross said Z Capital had long supported the company's management and business strategy.

"We believe that this new level of support from Z Capital will provide us with greater flexibility to execute our strategic plan of growing cash flow through elevating our guest experience, enhancing our value proposition and improving the overall performance of our properties," Ross said.

Affinity is privately held but has publicly traded debt of roughly $400 million.

According to filing with the Securities and Exchange Commission, Z Capital bought about 5.05 million shares over the past few months in Affinity.

According to its website, Z Capital specializes on investments in distressed middle market companies through the restructuring and bankruptcy process.