Affinity Gaming investor ends quest to take over casino operator

Affinity Gaming investor Z Capital Partners abandoned its efforts to acquire all remaining shares of the Las Vegas-based casino company, according to a securities filing Monday.

In a letter to Affinity's board, Z Capital CEO James Zenni said the Illinois-based investment group let the exclusivity agreement it had with Affinity lapse last week because there are "no foreseeable prospects for a strategic transaction given the state of the credit markets."

Z Capital is Affinity's major shareholder, controlling 40.5 percent of the company, which operates 11 casinos in four states. Affinity is not publicly traded but has $382.7 million in publicly owned debt.

Zenni, who is a member of the Affinity board, has made several attempts in the past few years to acquire the entire company. In Nevada, Affinity has five casinos, including the off-Strip Silver Sevens and three Primm resorts.

In November, Z Capital offered $15 per share for the all outstanding shares and twice extended exclusivity agreements with the board.

Affinity Gaming has roughly 60 shareholders and more than 20.3 million outstanding shares, including the stake owned by Z Capital. The investment fund said it would finance the transaction through "equity capital provided by funds managed and advised by Z Capital, as well as debt financing from sources with which Z Capital has a long-standing relationship."

Silver Point Capital, a Connecticut investment firm, is Affinity's second-largest shareholder with a 25.8 percent ownership stake. The next two largest shareholders combined own another 20 percent of Affinity Gaming.

The transaction would have required regulatory approval. Z Capital has slowly increased its stake in Affinity Gaming and is licensed in the four states — Nevada, Iowa, Colorado and Missouri — where the company operates casinos. Zenni was licensed by Nevada gaming regulators as an investor in 2012.

Z Capital describes itself as having approximately $2.3 billion of assets under management. Among the company's holdings are Mrs. Fields cookies, TCBY, Chevy's restaurants and the El Torito restaurant chain.

Affinity Gaming was formed in 2010 after the bankruptcy reorganization of Herbst Gaming. Sales and acquisitions since the reorganization created the existing company.

— Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find @howardstutz on Twitter.