An offer to acquire all outstanding shares of casino operator Affinity Gaming by its largest shareholder has expired, and the investment firm that made the offer believes the company that owns the Primm resorts and Silver Sevens should be sold.
In letter to Affinity’s board that was filed Wednesday with the Securities and Exchange Commission, Illinois-based Z Capital Partners said the company “has seen no meaningful board leadership or value creation for shareholders” since it was created in 2010 following the bankruptcy reorganization of Herbst Gaming.
Z Capital already owns a 39.5 stake in the company, which operates 11 casinos in four states. Z Capital offered in early April to purchase the remaining shares of the company for $9.75 per share in cash.
In the letter, Z Capital, which is headed by James Zenni — a member of Affinity’s board — said the company’s value has declined more than 30 percent in the last years.
“In addition, given the type of investors in the control group that now controls the board, it is not in a position to deliver value to Affinity Gaming’s shareholders in the future,” Z Capital wrote. “Unless fundamental changes are made, we would strongly encourage an orderly process to sell the company as a whole or in its constituent parts.”
In April said the company formed a committee of independent directors to review the Z Capital proposal and other strategic alternatives.
Jacques Cornet of ICR — Affinity’s outside investor relations adviser — said the committee had not completed its process and the company had not filed anything with the SEC about the offer.
Two Affinity shareholders, SPH and Spectrum Group Management, said in SEC filings that they didn’t support the Z Capital offer because it was deemed too low.
Affinity is not publicly traded but has publicly held debt.
Zenni made a similar offer to buy Affinity Gaming two years ago. He was appointed to the board last year after a lengthy legal skirmish with the previous board.
Richard Parisi, a senior analyst for Silver Point Capital, is Affinity’s chairman. Silver Point is Affinity’s second-largest shareholder with 25.1 percent.
Affinity Gaming appointed Michael Silberling as CEO last summer. The company experienced a nearly 1 percent increase in the revenue in the first quarter and saw its cash flow jump more than 30 percent.
Contact reporter Howard Stutz at email@example.com or 702-477-3871. Find @howardstutz on Twitter.