Lee sees something in Full House Resorts — opportunity

Anyone who has followed Dan Lee over the years understands his motivation in launching a proxy fight for control of regional casino operator Full House Resorts.

He sees opportunity.

Lee, 56, is one of five shareholders controlling 6.2 percent of Las Vegas-based Full House. They want a special meeting to remake the board of directors and change the company’s direction, and asked the Securities and Exchange Commission last week for permission to approach other shareholders.

With market capitalization of $24.7 million and more than 18.87 million shares outstanding, a takeover of Full House is doable.

Lee said there is value in Full House, despite comments in an SEC filing that said management “failed stockholders” with “irresponsible stewardship” and a “reckless buying binge.”

The company reminds Lee of Pinnacle Entertainment 14 years ago.

In 2002, Lee stepped in as CEO of then-Hollywood Park Entertainment. The company was in default on its bank debt and bleeding money. Lee moved the corporate headquarters from Glendale, Calif., to Las Vegas, changed the company’s name and direction and started what has become a regional gaming powerhouse.

By the time Lee left Pinnacle in November 2009, the company owned market-leading casinos in Louisiana, Missouri, Indiana and Northern Nevada; tripled its cash flow from seven years earlier; and had a road map that helped direct the company’s continued growth.

Full House owns three casinos: one in Indiana, one in Mississippi, and one in Fallon — the Stockman’s Casino. The company also manages the Grand Lodge Casino at Hyatt Lake Tahoe under a lease agreement.

On Monday, Full House management said it engaged financial and legal advisers to evaluate “strategic alternatives,” including “a potential merger or sale of the company.”

Their hands won’t be forced by Lee and the shareholders group.

“The company believes that the dissident group are the wrong people, with the wrong agenda, at the wrong time,” Full House said in a statement.

That was just the company’s opening salvo.

According to Lee’s SEC filing, Full House’s stock price fell almost 60 percent in the past 12 months. The company has made bad investments. A halted acquisition of Tunica, Miss., hotel-casino this year cost Full House 97 percent of its $1.75 million escrow and $300,000 in professional fees.

The shareholders questioned the management compensation. Chairman and CEO Andre Hilliou has seen his salary and benefits increase 59 percent since 2013. Chief Operating Officer Mark Miller experienced a 78 percent jump in compensation during that same time period.

Meanwhile, Full House’s revenue declined 14.7 percent in the second quarter and is down 12.4 percent for the first six months of the year. It has lost $9.57 million so far in 2014.

“Over the past nine months, we have attempted to engage quietly and constructively with management and the board,” Full House investor Bradley Tirpak said. “We see great value and potential for the company, but the stock price reflects our belief that the market has lost faith in this management team.”

Full House disagreed with the “dissident” shareholders.

The company said it addressed economic pressure through cost-cutting measures, both at the properties and in corporate offices. The Tunica deal was abandoned when market dynamics changed, and finishing the transaction would have been more damaging.

Full House also questioned Lee’s departure from Pinnacle. He left the company after an outburst at a St. Louis County Council meeting during debate over Pinnacle’s second casino development in that market. They also wondered why Lee resigned from the Palms hotel-casino after eight months as CEO.

Lee, 56, is a former Wall Street analyst and chief financial officer of Steve Wynn’s Mirage Resorts in the 1990s.

He left the Palms in May, saying a serious bicycle accident “caused me to have a lot of thinking.” He never planned a long-term role there.

After leaving Pinnacle, Lee formed Creative Casinos and took with him a development project in Lake Charles, La., next to Pinnacle’s L’Auberge resort. He sold the western Louisiana site to Ameristar Casinos for $32.5 million in 2012. The development is owned by Tilman Fertitta’s Landry’s Corp. and will open this year as the Golden Nugget Lake Charles.

“Our profit from the 18 months of operations of that startup company exceeds the retained earnings from the entire 25-year history of Full House Resorts,” Lee said in an email. “Unlike the management of Full House, I have a history of making money for shareholders and investors.”

Battle lines are drawn.

Howard Stutz’s Inside Gaming column appears Wednesdays and Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. Follow on Twitter: @howardstutz.

Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
Opendoor isn't the typical house flipping company
Unlike most house flippers, the company aims to make money from transaction costs rather than from selling homes for more than their purchase price.
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
News Headlines
Add Event
Home Front Page Footer Listing
You May Like

You May Like