A trust set up by the late CEO of casino operator Full House Resorts is siding with a group of shareholders looking to remake the board of the Las Vegas-based company.
In a letter to the company’s board, the co-trustees of the Allen E. Paulson Living Trust said they will support holding a special shareholders meeting that is being requested by a shareholders group headed by gaming executive Dan Lee.
The trust controls 9.4 percent of Full House and was set up by Allen Paulson, who was CEO of Full House from 1994 until his death in 2000.
Co-trustees Crystal Christensen and Vikki Paulson said shareholders want “transparency” from the board concerning management’s plans for the company’s direction and prospects.
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 Lake Tahoe under a lease agreement.
“While we are reserving judgment on the merits of the various proposals put forward by this group for consideration at the requested special meeting, we do believe it is important that the stockholders and the company have an open dialogue with respect to its management,” the co-trustees wrote.
An investors relations spokesman for Full House said company officials were unavailable for comment Tuesday.
Lee is one of five shareholders controlling 6.2 percent of Full House. They are proposing to double the size of the board to 10 and change the company’s direction.
The group has asked the Securities and Exchange Commission for permission to approach other shareholders.
The proxy fight will need 40 percent approval from shareholders to schedule a vote.
Lee’s group has criticized the company’s management and cited a 59 percent drop in the company’s stock price. It also said executives are overcompensated and highlighted the failed acquisition of a casino in Tunica, Miss.
The shareholder group suggested Full House doesn’t have the money to finish construction of a hotel at the Mississippi casino.
Full House said it has been “evaluating strategic alternatives for several months” and called a proxy fight “inappropriate and disruptive.” In a statement, company officials said they were exploring options, such as “potential merger or sale of the company.”
Allen Paulson is considered one of Full House’s founders along with automobile industry leader Lee Iacocca, who appeared with company executives in front of Nevada gaming regulators in 2007.
“(Paulson) invested significant amounts of his time and money into making Full House Resorts a successful and thriving company,” the co-trustees wrote. “Further, our family has had a significant, long-term investor relationship with the company.”
Shares of Full House jumped 15 percent Monday on Nasdaq when the letter was first revealed. On Tuesday, shares fell 1 cent, or 0.78 percent, to close at $1.27.